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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

(Mark One)

[ X ] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____to ______

Commission File Number: 0-30695

ARVANA INC.(Name of small
business issuer in its charter)

|NEVADA                                           | 87-0618509                          
|------------------------------------------------ | ------------------------------------
|(State or other jurisdiction of incorporation or | (I.R.S. Employer Identification No.)
|organization)                                    |                                     

|Suite 2610, 1066 West Hastings Street          |           
|---------------------------------------------- | ----------
|Vancouver, British Columbia, Canada            | V6E 3X2   
|(Address of principal
      executive offices) | (Zip Code)

Issuers telephone number: (604) 684-4691

Securities registered under Section 12(b) of the Exchange
Act:

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Not Applicable      | Not Applicable                           

Securities registered under Section 12(g) of the Exchange
Act:

Common Stock, $0.001 par value(Title of class)

Check whether the issuer (1) filed all reports required to be
  filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
  for such shorter period that the registrant was required to file such reports),
  and (2) has been subject to such filing requirements for the past 90 days. Yes[
  X ] No[ ]

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is not contained in this form, and no disclosure
  will be contained, to the best of registrant's knowledge, in definitive proxy
  or information statements incorporated by reference in Part III of this Form
  10-KSB or any amendment to this Form 10-KSB. [ X ]

Indicate by check mark whether the registrant is a shell company
  (as defined in Rule 12b-2 of the Exchange Act). Yes[ X ] No[ ]

State issuer's revenues for its most recent fiscal year
$4,740,895

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State the aggregate market value of the voting and non-voting
  common equity held by non-affiliates computed by reference to the price at which
  the common equity was sold, or the average bid and asked price of such common
  equity, as of a specified date within the past 60 days. (See definition of affiliate
  in Rule 12b-2 of the Exchange Act.) $86,025
  as at April 10, 2008.

State the number of shares outstanding of each of the issuer's
  classes of common equity, as of the latest practicable date. 21,202,375 common
  shares, $0.001 par value outstanding as at April 14, 2008.

Transitional Small Business Disclosure Format (check one): Yes[
] No[ X ]

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|ITEM 1. | DESCRIPTION OF BUSINESS.
|------- | ------------------------

FORWARD-LOOKING STATEMENTS

The information in this Annual Report on Form 10-KSB contains
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements involve risks and uncertainties,
including statements regarding our capital needs, business plans and
expectations. Such forward-looking statements involve risks and uncertainties
regarding our planned business, availability of funds, government regulations,
common share prices, operating costs, capital costs, our ability to deploy our
planned business and generate revenues and other factors. Any statements
contained herein that are not statements of historical facts may be deemed to be
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may", "will", "should", "expect", "plan",
"intend", "anticipate", "believe", "estimate", "predict", "potential" or
"continue", the negative of such terms or other comparable terminology. These
statements are based on certain assumptions and analyses made by our management
in light of its experience and its perception of historical trends, current
conditions and expected future developments as well as other factors they
believe are appropriate in the circumstances. Actual events or results may
differ materially. In evaluating these statements, you should consider various
factors, including the risks outlined below, and, from time to time, in other
reports we file with the SEC. These factors may cause our actual results to
differ materially from any forward-looking statement. We disclaim any obligation
to publicly update these statements, or disclose any difference between its
actual results and those reflected in these statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements.

Overview

Until the end of 2007 our business operations were focused on
the telecommunications industry. In December 2007 we decided to exit the
telecommunications industry and disposed of our German subsidiary Hallotel. We
are currently in the process of evaluating other industries and business
opportunities in order to determine the focus of our future business
opportunities. There can be no guarantee that we will be successful in
identifying suitable business opportunities, or if we are able to identify
suitable business opportunities, that we will able to find an adequate source of
financing to acquire any business or business assets, and commence operations,
or that those operations, if commenced, will be successful in generating
profits.

Hallotel is a German based telecommunications service provider
that is focused on the provision of long distance telephone calls between
Germany, Austria, Switzerland and Turkey. Hallotel was acquired by us on August
23, 2006 and disposed of on December 7, 2007. Prior to the acquisition of
Hallotel we were engaged in the telecommunications industry through our
subsidiary Arvana Networks. Arvana Networks was planning to provide voice over
the internet (VoIP) telephone technology services, primarily in Brazil, and was
in the start-up phase of its operations since March, 2005. With the acquisition
of the Hallotel operation in 2006 and the limitation of funds, the plans to
develop Arvana Networks as a provider of Internet services were put on hold in
2006 and abandoned in 2007.

Corporate Organization

We were incorporated under the laws of the State of Nevada on
June 16, 1977. Our authorized capital is comprised of 100,000,000 shares of
common stock, par value of $0.001.

- 3 -

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Subsidiaries

We operate through our wholly-owned subsidiaries which include
the following:

| | 1. | Arvana Networks Inc., a company incorporated in Barbados
      in January, 2005.                                                                                          
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    |                                                                                                                                                                           
| | 2. | Arvana Participações S.A., a company incorporated in
      Brazil in April, 2005 and its subsidiary Arvana Comunicações. S.A., both
      subsidiaries of Arvana Networks.
| |    |                                                                                                                                                                           
| | 3. | BCH Beheer, a company incorporated in the Netherlands in
      October, 2004.                                                                                             

Acquisition of Arvana Networks

We acquired Arvana Networks in August, 2005 in a transaction
whereby we issued 4,500,000 shares of our common stock to the former
shareholders of Arvana Networks. Included in the 4,500,000 shares were 1,500,000
shares that were not considered issued for accounting purposes as the
consideration for those shares had not yet been received. In 2007, the 1,500,000
shares were returned to the Company and cancelled. Arvana Networks business
activities to date were directed towards market analysis, developing business
plans and searching out appropriate local partners in order to launch VoIP
telephone services in Rio de Janeiro, Sao Paulo and other major cities in Brazil
in 2006. We are no longer pursuing business in the telecommunications industry
and Arvana Networks and its subsidiaries are considered to be inactive.

Acquisition of BCH Beheer and Hallotel

On August 9, 2006, we entered into a share purchase agreement
with Brulex  Consultadoria Economica E Marketing Ltda. (Brulex), its
subsidiary BCH Beheer, and its subsidiary Hallotel Deutschland GmbH (Hallotel)
whereby we agreed to acquire Hallotel through the acquisition of all of the
outstanding shares of BCH Beheer from Brulex. We completed this transaction on
August 23, 2006, and we paid to Brulex the following consideration for the
purchase:

- the issuance of 3,541,700 shares of our common stock;
- the payment of 500,000 Euros in cash (equivalent to $639,700 based on an
  exchange rate of $1.00 per 0.7816 Euros); and
- the issuance of a promissory note in the amount of 250,000 Euros
  ($319,850).

In addition, we provided for an adjustment to the purchase
price for certain payments made by Hallotel after October, 2005, and up to the
closing date of August 23, 2006; 80,932 Euros ($103,544) for certain telephony
technology hardware purchased; and 277,630 Euros ($355,200) for actual
commissions paid by Hallotel to its third party sales persons in respect of
carrier pre-select sign-ups on net new customers. The total amount provided for
in these adjustments is 358,562 Euros ($458,744) and is payable to Brulex.

On December 7, 2007, we entered into a settlement and share
purchase agreement with Brulex to sell Hallotel back to Brulex. Under the terms
of the agreement Brulex returned to the Company for cancellation the 3,541,700
of its common shares issued for the acquisition of BCH Beheer and Hallotel. The
shares were valued at $283,336 based on our common share price of $0.08 on
December 7, 2007. The amounts due to Brulex under the terms of the original
Acquisition were reduced by $447,116 to €225,000. We also wrote off a receivable
due from Hallotel in the amount of $74,913 as well as software retained by
Hallotel in the amount of $64,104. The net effect of the transactions resulted
in a loss of $2,239,014 upon disposal of Hallotel.

- 4 -

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With the sale of Hallotel we have exited the telecommunications
industry. We have retained ownership of BCH Beheer and it is currently an
inactive subsidiary.

Our Plan of Operations

We exited the telecommunications industry at the end of 2007
and our present plan of operations for the next twelve months is to identify and
evaluate industries and business opportunities in order to find a suitable
business to enter into.

We will not be able to pursue any new business opportunities
without additional financing. Our board of directors and management are actively
pursuing obtaining financing in order to maintain operations while we evaluate
potential businesses. Since December 31, 2007 we have obtained loans totaling
$200,000 to provide operating capital. We estimate that this provides sufficient
cash to operate through June 30, 2008.

In order to maintain operations while we evaluate new
businesses we anticipate that we will need additional funding of approximately
$200,000 during 2008. We had cash in the amount of $2,913 and a working capital
deficit of $1,117,333 as at December 31, 2007. If we are successful in
identifying a new business opportunity we will require funding in order to
pursue that opportunity. The amount of funding required will depend on the
opportunity and is not determinable at this time.

Other than small advances from shareholders, we believe that
debt financing will not be an alternative for funding additional phases of our
business development as we do not have tangible assets to secure any debt
financing. We anticipate that additional funding will be in the form of equity
financing from the sale of our common stock. However, we do not have any
financing arranged and we cannot provide investors with any assurance that we
will be able to obtain sufficient funding from the sale of our common stock to
fund our plan of operations. In addition, in order to obtain equity financing it
may be necessary for us to consider a capital restructuring, which may or may
not include a common stock reverse split. The board is currently considering all
avenues available to obtain financing.

Accordingly, we will require continued financial support from
our shareholders and creditors until we are able to generate sufficient cash
flow from operations on a sustained basis. There is substantial doubt that we
will be successful at achieving these results.

Management Team

Teyfik Oezcan, the Chief Executive Officer of Hallotel, was
invited to join the Arvana board and was appointed President and Chief Executive
Officer on December 20, 2006. With the sale of Hallotel to Brulex, he resigned
as CEO and a director of Arvana and its subsidiaries on December 7, 2007.
Leonard Gordon resigned as Chief Financial Officer effective March 12, 2007.
Karen Engleson, our Corporate Secretary, was appointed Acting Chief Financial
Officer effective March 12, 2007. Ms Engleson resigned as an officer and
secretary on May 8, 2007.

Wayne Smith was appointed Chief Financial Officer, Corporate
Secretary and Treasurer on May 8, 2007 and Acting Chief Executive Officer on
December 7, 2007 with the resignation of Mr. Oezcan. Mr. Smith is a
self-employed financial consultant. In addition to his position with Arvana Inc,
Mr. Smith is the Chief Financial Officer, Secretary, Treasurer and a Director
since February 2, 2007 of Icon Development, Inc. Icon is a company engaged in
the research and development of xenotransplantation in the biotechnology
industry that is publicly traded on the OTC Bulletin Board. Previously, Mr.
Smith was the Chief Operating Officer and Chief Financial Officer of Visiphor
Corporation from July 2003 through January 2007. Visiphor is a software
development and consulting services company that is publicly traded on the OTC
Bulletin Board and the TSX Venture Exchange. Prior to those positions, he served
as Visiphors Chief Financial Officer from September 2002 to July 2003.

- 5 -

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Since 1997, Mr. Smith has been a partner of TelePartners
Consulting Inc., a consulting services company that provides management and
financial consulting services. Mr. Smith holds a Chartered Accountant
designation in Canada.

Research and Development Expenditures

During 2005 and 2006 Arvana Networks had spent several months
developing voice services for our project in Brazil. All research and
development activities were terminated during the fourth quarter of fiscal 2006.
We spent $117,249 in research and development activities during fiscal 2006 and
$Nil in fiscal 2007.

|ITEM 2. | DESCRIPTION OF PROPERTIES.
|------- | --------------------------

We rent approximately 1300 square feet of office space at 1066
West Hastings Street in Vancouver, British Columbia, Canada, on a month-to-month
basis that we use for our principal executive offices. Our monthly rent payments
total $2,500 Canadian dollars.

|ITEM 3. | LEGAL PROCEEDINGS.
|------- | ------------------

We currently are not a party to any material legal proceedings
and to our knowledge, no such proceedings are threatened or contemplated.

|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY
      HOLDERS.
|------- | ----------------------------------------------------------

No matters were submitted to a vote of our security holders,
through the solicitation of proxies or otherwise, during our fourth quarter
ended December 31, 2007.

- 6 -

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PART II

|ITEM 5. | MARKET FOR COMMON EQUITY
      AND RELATED STOCKHOLDER MATTERS.
|------- | ---------------------------------------------------------------

Market Information

Our common shares are quoted on the OTC Bulletin Board under
the symbol ARVI and on the Frankfurt Stock Exchange under the symbol T5U.F. The
following table indicates the high and low bid prices of our common shares
during the periods indicated:

|OTCBB:                |   |          |  |   |         | 
|--------------------- | - | -------- |  | - | ------- | 
|                      |   |          |  |   |         | 
|QUARTER               |   | HIGH BID |  |   | LOW BID | 
|ENDED                 |   |          |  |   |         | 
|                      |   |          |  |   |         | 
|December 31, 2007     | $ | 0.15     |  | $ | 0.06    | 
|September 30, 2007    | $ | 0.15     |  | $ | 0.10    | 
|June 30, 2007         | $ | 0.30     |  | $ | 0.10    | 
|March 31, 2007        | $ | 0.35     |  | $ | 0.08    | 
|December 31, 2006     | $ | 0.50     |  | $ | 0.20    | 
|September 30, 2006    | $ | 1.00     |  | $ | 0.35    | 
|June 30, 2006         | $ | 1.80     |  | $ | 0.75    | 
|March 31, 2006        | $ | 2.12     |  | $ | 1.75    | 
|                      |   |          |  |   |         | 
|FRANKFURT (in Euros): |   |          |  |   |         | 
|                      |   |          |  |   |         | 
|QUARTER               |   | HIGH BID |  |   | LOW BID | 
|ENDED                 |   |          |  |   |         | 
|                      |   |          |  |   |         | 
|December 31, 2007     |   | 0.06     |  |   | 0.03    | 
|September 30, 2007    |   | 0.10     |  |   | 0.05    | 
|June 30, 2007         |   | 0.10     |  |   | 0.06    | 
|March 31, 2007        |   | 0.26     |  |   | 0.08    | 
|December 31, 2006     |   | 0.42     |  |   | 0.10    | 
|September 30, 2006    |   | 0.75     |  |   | 0.33    | 
|June 30, 2006         |   | 1.46     |  |   | 0.75    | 
|March 31, 2006        |   | 1.70     |  |   | 1.42    | 

The source of the high and low bid information for the OTCBB is
the NASD OTC Bulletin Board. The market quotations provided reflect inter-dealer
prices, without retail mark-up, markdown or commission and may not represent
actual transactions.

Holders of Common Stock

As at April 14, 2008, we had 21,202,375 shares of common stock
issued and outstanding and there were 55 registered holders based on the records
of the Companys transfer agent. The registered holders do not include
beneficial owners of the Company's common shares whose shares are held in the
names of various securities brokers, dealers and registered clearing
agencies.

- 7 -

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Dividends

There are no restrictions in our articles of incorporation or
bylaws that prevent us from declaring dividends. The Nevada Revised Statutes,
however, do prohibit us from declaring dividends where, after giving effect to
the distribution of the dividend:

|1. | We would not be able to pay our debts as they become due
      in the usual course of business; or                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                             
|2. | Our total assets would be less than the sum of our total
      liabilities plus the amount that would be needed to satisfy the rights of
      shareholders who have preferential rights superior to those receiving the
      distribution.

We have not declared any dividends and we do not plan to
declare any dividends in the foreseeable future.

Recent Sales of Unregistered Securities

During the quarter ended December 31, 2007, there were no sales
of securities.

Small Business Issuer Purchases of Equity Securities

During the quarter ended December 31, 2007, there were no
purchases of equity securities effected by the Company or any affiliated
purchasers.

- 8 -

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|ITEM 6. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
      OF OPERATION.
|------- | ----------------------------------------------------------------

The following discussion of our financial condition, changes in
financial condition and results of operations for the year ended December 31,
2007 should be read in conjunction with our audited consolidated financial
statements and related notes for the year ended December 31, 2007.

Presentation of Financial Information

Our financial statements for the year ended December 31, 2007
include the accounts of:

- Arvana Networks;
- Arvana Par;
- Arvana Com;
- BCH Beheer;
- Hallotel Deutschland GmbH up to the disposal date of December 7, 2007.

The accounts of BCH Beheer and Hallotel are included in our
statements of operations and statements of cash flows from August 23, 2006,
being the date of closing of our acquisition of BCH Beheer and Hallotel, through
December 31, 2007 for BCH Beheer and December 7, 2007 for Hallotel. Our results
of operations presented below for periods prior to August 23, 2006 do not
include the results of operations of BCH Beheer and Hallotel, and do not include
the results of operations of Hallotel after December 7, 2007.

Results of Operations

References in the discussion below to 2007 are to our fiscal
year ended December 31, 2007. Similarly, references to 2006 are to our fiscal
year ended December 31, 2006. References to 2008 are to our current fiscal year
that will end December 31, 2008.

Our operations for the years ended December 31, 2007 and 2006
are summarized below. The results of operations for the years ended December 31,
2007 and 2006 are from our telecommunications industry business. We are no
longer in the telecommunications industry and these results of operations are
not expected to be reflective of future operations.

Year ended December 31,
      2007
    Year ended December 31,
      2006Revenues
    $4,740,895
    $2,832,819Costs of
      Sales
    ($3,654,429)
    ($2,242,209)Gross
      profit
    $1,086,466
    $590,610Operating Expenses:


- 9 -

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Selling and promotion
    $67,329
    $120,749General and Administration
    $1,228,593
    $1,703,035Research and Development
    $0
    $117,249Depreciation
    $198,405
    $71,117Other
      Items:Stock
      Based Compensation
    $662,800
    $232,400Loss
      on write-off of equipment
    $37,196
    $30,602Loss on acquisition of Arvana Com
      $0
      $45,888Loss
      on bad debt expense
    $58,411
    $0Loss
      on disposal of Hallotel
    $2,239,014
    $0Other
      income
    $9,425
    $0Gain
      on debt settlement
    $75,000
    $0Income
      taxes
    $54,535
    $12,500Other comprehensive income (losses)
    $13,790
    ($59,530)Comprehensive Loss for the Period
    $3,361,600
    $1,802,460


Revenues

All of our revenues are attributable to the services provided
by our former subsidiary, Hallotel, up to the disposal date of December 7, 2007.
We did not generate any revenues during the period prior to our acquisition of
Hallotel or during the period after our disposal of Hallotel and did not
generate any revenues outside of our former Hallotel business. We presently do
not earn revenues and will not earn revenues until we enter into another
business, and there can be no assurance that we will earn revenues at that
time.

Cost of Sales

All of our costs of sales are attributable to costs of sales
incurred by our former Hallotel business in connection with providing its
services. We do not expect incur to similar costs of sales in future
periods.

Our costs of sales were $3,654,429 for fiscal 2007,
representing 77% of revenues, as compared to $2,242,209 for fiscal 2006,
representing 79% of revenues.

Gross Profits

Our gross profits were $1,086,466 for fiscal 2007, representing
  22.9% of revenues, as compared to $590,610, representing 21% of revenues in
  2006. All of our gross profits were attributable to our former Hallotel business
  and we do not expect to generate similar gross profits in 2008.

- 10 -

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Sales and Promotion Expenses

Sales and promotion expenses consist primarily of commissions
paid to third parties in connection with our former Hallotel business and we do
not expect to incur similar sales and promotion expenses in 2008.

Administration Expenses

Our administration expenses decreased to $1,228,593 for fiscal
2007 compared to $1,703,035 for fiscal 2006. Administration expenses associated
with the public company, Arvana Inc., and Arvana Networks were $551,527 and
administration expenses of BCH Beheer and Hallotel were $677,066. The majority
of the expenses in Arvana Inc. and Arvana Networks consisted of rent, directors
fees, legal, audit, travel and consulting fees. In Hallotel, administration
expenses are comprised of personnel expenses, postal and telecommunication
costs, consulting fees, car expenses, maintenance expenses and bank charges.
With the disposal of Hallotel we do not expect to incur that portion of our
administrative expenses. We expect the administrative expenses for Arvana Inc
and Arvana Networks to remain at approximately the same level as 2007 or
decrease slightly in 2008.

Research and Development

Our research and development activities were terminated during
the year which resulted in a decrease in our research and development expenses
to $NIL for fiscal 2007 compared to $117,249 for fiscal 2006.

Stock-based Compensation

In June 2006, we awarded 1,600,000 stock options to a number of
directors, management and consultants. The stock options have an exercise price
of $1.25 per share which was the current market value of the shares at the time.
As a result of this program, we will record an expense of $1,424,000 in
stock-based compensation expense over the vesting period of the options. The
Company recorded an expense of $662,800 in 2007 and $232,400 in 2006 for the
pro-rated portion of the full charge.

Loss on the write-off of equipment

In fiscal 2007, we recorded a loss on the write-off of
equipment in the amount of $37,196 which was attributable to the net write-off
of equipment owned by Arvana Comunicacoes.

Loss on acquisition of Arvana Comunicações

In fiscal 2006, the amount of $45,888 was written off as a
result of increasing our investment in Arvana Comunicacoes from 75% to 100% in
exchange for capital assets originally contributed under the terms of the
cancelled investment agreement.

Loss on disposal of Hallotel

On December 7, 2007, the Company entered into a settlement and
share purchase agreement with Brulex to dispose of the Companys subsidiary,
Hallotel. Under the terms of the agreement Brulex returned to the Company for
cancellation the 3,541,700 of its common shares issued for the acquisition of
BCH Beheer and Hallotel. The shares were valued at $283,336 based on the
Companys common share price of $0.08 on December 7, 2007. The amounts due to
Brulex under the terms of the original Acquisition were reduced by $447,116,
which consisted of accounts payable of $338,236 and note payable of $108,880, to
€225,000. The Company wrote off a receivable due from Hallotel in the amount of
$74,913 as well as

- 11 -

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software retained by Hallotel in the amount of $64,104. The
original investment in Hallotel by the Company of $2,948,003 was adjusted by the
effect of Hallotels operations from acquisition to disposal resulting in a net
decrease in the Companys retained earnings of $74,455 and an accumulated other
comprehensive loss of $43,099. The net effect of the above transactions resulted
in a loss of $2,239,014 upon disposal of Hallotel.

Net Loss for the Period

We incurred a net loss of $3,375,390 for the year ended
December 31, 2007 compared with a net loss of $1,742,930 in 2006. The majority
of the loss in 2007 was related to the loss on disposal of our Hallotel
business.

Liquidity and Capital Resources

As at December 31, 2007, we had cash of $2,913 and a working
capital deficit of $1,117,333. This compares to cash of $233,452 and working
capital deficit of $1,486,521 as at December 31, 2006.

Plan of Operations

We exited the telecommunications industry at the end of 2007
and our present plan of operations for the next twelve months is to identify and
evaluate industries and business opportunities in order to find a suitable
business to enter into.

We will not be able to pursue any new business opportunities
without additional financing. Our board of directors and management are actively
pursuing obtaining financing in order to maintain operations while we evaluate
potential businesses. Since December 31, 2007 we have obtained loans totaling
$200,000 to provide operating capital. We estimate that this provides sufficient
cash to operate through June 30, 2008.

In order to maintain operations while we evaluate new
businesses we anticipate that we will need additional funding of approximately
$200,000 during 2008. We had cash in the amount of $2,913 and a working capital
deficit of $1,117,333 as at December 31, 2007. If we are successful in
identifying a new business opportunity we will require funding in order to
pursue that opportunity. The amount of funding required will depend on the
opportunity and is not determinable at this time.

During the next twelve month period, we anticipate that our
revenues will not exceed our operating expenses. Accordingly, we will be
required to obtain additional financing in order to continue our plan of
operations. Other than small advances from shareholders, we believe that debt
financing will not be an alternative for funding additional phases of our
business development as we do not have tangible assets to secure any debt
financing. We anticipate that additional funding will be in the form of equity
financing from the sale of our common stock. However, we do not have any
financing arranged and we cannot provide investors with any assurance that we
will be able to obtain sufficient funding from the sale of our common stock to
fund our plan of operations. In addition, in order to obtain equity financing it
may be necessary for us to consider a capital restructuring, which may or may
not include a common stock reverse split. The board is currently considering all
avenues available to obtain financing.

Cash Used in Operating Activities

We used cash in operations in the amount of $616,700 during
fiscal 2007, as compared to $352. Cash used in operations was attributable
primarily to payments for administration expenses incurred from our former
Hallotel business and our current subsidiaries. We do not expect to generate
significant cash flows from our operations in 2008.

- 12 -

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Cash Used in Investing Activities

We used cash in investing activities in the amount of $139,354
during fiscal 2007. Of this amount, $89,920 was attributable to our acquisition
of equipment, a recovery of $3,702 from proceeds of the sale of equipment and
$53,136 was cash held by Hallotel at the date of disposal. Cash used in
investing activities during 2006 was $1,589,390 and consisted of $1,339,576 in
net cash consideration for the acquisition of Hallotel and $249,814 to purchase
capital equipment by Hallotel.

Cash Flows from Financing Activities

The Company gained $511,638 from financing activities during
fiscal 2007. The Company received $360,672 from unsecured loans bearing 6%
interest per annum. The Company also increased its indebtedness to related
parties during the year by $150,966. In fiscal 2006 the Company obtained
$976,500 through issuances of its common stock and received advances of $70,160
from related parties.

Amounts due to IP Horizon LLC

Arvana Networks had an agreement with IP Horizon LLC (IPH),
whereby IPH was issued 1,500,000 shares in exchange for a commitment to deliver
equipment, software and network hardware for the initial launching of VoIP
service in Brazil.

As at December 31, 2006, the Company had not received the full
complement of assets to be acquired in connection with this transaction or other
consideration. Accordingly, the 1,500,000 shares were not reflected on our
financial statements as having been issued. In 2007 the following agreement was
reached with IPH with respect to this transaction:

IPH returned to the Company for cancellation the 1,500,000
common shares of Arvana issued to IPH in August 2005.

IPH had contributed certain equipment to, and had developed
certain software for, the Company, with an agreed upon value of $150,000. In
settlement of the debt due from the contribution of the aforementioned equipment
and software architecture services from IPH to Arvana and Arvana Networks, we
entered into a Regulation D Debt Conversion Agreement dated effective March 28,
2007 with Arvana Networks Inc. and IPH, a copy of which was filed with our
current report on Form 8-K filed with the SEC on May 4, 2007. Our board of
directors approved the issuance of the 500,000 new shares to IPH on May 1, 2007,
which shares are subject to a two year contractual hold period. Due to a delay
in processing, the original 1,500,000 shares were returned to treasury and
cancelled during the third quarter of fiscal 2007 and the 500,000 debt
settlement shares were issued during the third quarter of fiscal 2007.

Going Concern

For the year ended December 31, 2007, the Company incurred a
loss from operations of $3,375,390. At December 31, 2007, the Company had a
working capital deficiency of $1,117,333. These conditions raise substantial
doubt about the Companys ability to continue as a going concern.We have not
attained profitable operations and are dependent upon obtaining financing to
pursue our plan of operations. For these reasons our auditors stated in their
report on our audited financial statements that they have substantial doubt we
will be able to continue as a going concern.

- 13 -

---

Future Financings

We anticipate continuing to rely on equity sales of our shares
of common stock in order to continue to fund our business operations. There is
no assurance that we will achieve any additional sales of our equity securities
or arrange for debt or other financing to fund our plan of operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are
reasonably likely to have a current or future effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources that are material to
stockholders.

Critical Accounting Policies

Basis of Presentation

We are currently in the development stage and present our
financial statements in accordance with Statement of Financial Accounting
Standard (SFAS) No. 7, Accounting and Reporting by Development Stage
Enterprises.

Our financial statements include the accounts of the Company,
its wholly-owned subsidiaries Arvana Networks, Arvana Par, Arvana Com, BCH
Beheer and its former wholly owned subsidiary Hallotel up to December 7, 2007.
All significant inter-company transactions and balances have been eliminated.

Foreign currency translation and transactions

Our functional currency is the United States dollar.

The Company uses the temporal method when translating the
Brazilian subsidiary operations. Long-term assets and liabilities denominated in
a foreign currency are translated into US dollars at the exchange rate in effect
on the transaction date. Revenue and expenses are translated at the average
rates of exchange prevailing during the periods. The cumulative effects of these
translation adjustments were included in administration expenses as they were
insignificant.

The Company used the current rate method when translating its
former German subsidiary operations Hallotel. All assets and liabilities
denominated in a foreign currency are translated into US dollars at the exchange
rate in effect on the balance sheet date. Revenue and expenses are translated at
the average rates of exchange prevailing during the periods. The cumulative
effects of these translation adjustments are presented as a component of
comprehensive income.

Transactions conducted in foreign currencies are recorded using
the exchange rate in effect on the transaction date. At the period end, monetary
assets and liabilities are translated to the functional currency of each entity
using the exchange rate in effect at the period end date. Transaction gains and
losses are recorded in foreign exchange gain or loss in administration expenses
as they were insignificant.

Estimates

The preparation of consolidated financial statements in
conformity with US GAAP requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.

- 14 -

---

Stock-based Compensation Expense

The Company accounts for all stock-based payments to employees
and non-employees under SFAS No.123R, Accounting for Stock-Based Compensation,
using the fair value based method. Under the fair value method, stock-based
payments are measured at the fair value of the consideration received, or the
fair value of the equity instruments issued, or liabilities incurred, whichever
is more reliably measurable. The cost of stock-based payments to non-employees
that are fully vested and non-forfeitable at the grant date is measured and
recognized at that date. We granted stock options in June 2006 and will record
an expense of $1,424,000 in stock-based compensation expense over the vesting
period of the options. The Company recorded an expense of $662,800 in 2007 and
$232,400 in 2006 for the pro-rated portion of the full charge.

Recent Accounting Pronouncements

In September 2006, the Financial Accounting Standards Board
(FASB) issued SFAS No. 157, Fair Value Measurements. SFAS No. 157
establishes a framework for measuring the fair value of assets and liabilities.
This framework is intended to provide increased consistency in how fair value
determinations are made under various existing accounting standards which
permit, or in some cases require, estimates of fair market value. SFAS No. 157
is effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. Earlier application is encouraged, provided
that the reporting entity has not yet issued financial statements for that
fiscal year, including any financial statements for an interim period within
that fiscal year.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities  Including an Amendment
of FASB Statement No. 115. This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. Most of the
provisions of SFAS No. 159 apply only to entities that elect the fair value
option. However, the amendment to SFAS No. 115 Accounting for Certain
Investments in Debt and Equity Securities applies to all entities with
available-for-sale and trading securities. SFAS No. 159 is effective as of the
beginning of an entitys first fiscal year that begins after November 15, 2007.
Early adoption is permitted as of the beginning of a fiscal year that begins on
or before November 15, 2007, provided the entity also elects to apply the
provision of SFAS No. 157, Fair Value Measurements.

The Company does not expect that the adoption of these new
accounting pronouncements will have a significant effect on its financial
statements.

- 15 -

---

|ITEM 7. | FINANCIAL STATEMENTS.
|------- | ---------------------

Our audited financial statements for the year ended December
31, 2007, as set forth below, are included with this Annual Report on Form
10-KSB. Our audited financial statements are prepared on the basis of accounting
principles generally accepted in the United States and are expressed in U.S.
dollars.

|                                                                                                                                                                                                            | PAGE
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|Auditors Reports                                                                                                                                                                                           | 17  
|Consolidated Balance Sheets, December 31, 2007 and 2006                                                                                                                                                     | 19  
|Consolidated Statements of Operations for the years ended
      December 31, 2007 and 2006 and cumulative amounts from the beginning of
      the development stage on January 1, 2005 to December 31, 2007 | 20  
|Consolidated Statements of Cash Flows for the years ended
      December 31, 2007 and 2006 and cumulative amounts from the beginning of
      the development stage on January 1, 2005 to December 31, 2007 | 21  
|Consolidated Statements of Changes in Stockholders
      Equity for the years ended December 31, 2007 and 2006                                                                                             | 22  
|Notes to Consolidated Financial Statements                                                                                                                                                                  | 23  

- 16 -

---



REPORT OF INDEPENDENT REGISTERED
  PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of 
  Arvana, Inc.

We have audited the accompanying consolidated balance sheet of
  Arvana, Inc. as at December 31, 2007 and the related consolidated statements
  of operations, comprehensive loss, stockholders' equity and cash flows for the
  year then ended and for the period from the beginning of the development stage
  on January 1, 2005 to December 31, 2007. These consolidated financial statements
  are the responsibility of the Company's management. Our responsibility is to
  express an opinion on these financial statements based on our audit. The financial
  statements of the Company as at December 31, 2007 were audited by other auditors
  whose report dated March 31, 2007, expressed an unqualified opinion on those
  financial statements.

We conducted our audit in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform the audit to obtain reasonable assurance about whether
  the financial statements are free of material misstatement. An audit includes
  examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements. An audit also includes assessing the accounting
  principles used and significant estimates made by management, as well as evaluating
  the overall financial statement presentation. We believe that our audit provide
  a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company as at December 31, 2007 and the results of its operations and its
  cash flows for the year then ended and for the period from the beginning of
  the development stage on January 1, 2005 to December 31, 2007 in conformity
  with generally accepted accounting principles in the United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 1 to the consolidated financial statements, the Company has minimal
  assets is dependent upon financing to continue operations has suffered recurring
  losses from operations and has working capital deficit as of December 31, 2007.
  These matters raise substantial doubt about the Company's ability to continue
  as a going concern. Management's plans in regards to these matters are discussed
  in Note 1. The consolidated financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

|                  | **"DAVIDSON** **&
      COMPANY LLP"**
|----------------- | --------------------------------------
|                  |                                       
|Vancouver, Canada | Chartered Accountants                 
|                  |                                       
|April 10, 2008    |                                       



1200 - 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver,
  BC, Canada, V7Y 1G6 
  Telephone (604) 687-0947 Fax (604) 687-6172

- 17 -

---



**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

Stockholders and Board of Directors
  Rival Technologies, Inc and Subsidiaries (A Development Stage Company)
  Las Vegas, Nevada

We have audited the consolidated balance sheet of Arvana, Inc.
  and Subsidiaries (A Development Stage Company), (the “Company”)
  as of December 31, 2006, and the related consolidated statement of operations,
  stockholders’ equity and cash flows for the year then ended, and for the
  period from the beginning of the development stage (January 1, 2005) to December
  31, 2006. These consolidated financial statements are the responsibility of
  the Company's management. Our responsibility is to express an opinion on these
  financial statements based on our audit.

We conducted our audit in accordance with the standards of
  the Public Company Accounting Oversight Board (United States of America). Those
  standards require that we plan and perform the audit to obtain reasonable assurance
  about whether the financial statements are free of material misstatement. The
  Company is not required to have, nor were we engaged to perform, an audit of
  its internal control over financial reporting. Our audit included consideration
  of internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose
  of expressing an opinion on the effectiveness of the Company’s internal
  control over financial reporting. Accordingly, we express no such opinion. An
  audit includes examining, on a test basis, evidence supporting the amounts and
  disclosures in the financial statements. An audit also includes assessing the
  accounting principles used and significant estimates made by management, as
  well as evaluating the overall financial statement presentation. We believe
  that our audit provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  the Company at December 31, 2006, and the results of its operations and its
  cash flows for the year then ended in conformity with accounting principles
  generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming
  that the Company will continue as a going concern. As discussed in Note 1 to
  the financial statements, the Company is in the development stage, has suffered
  recurring losses from operations, has used, rather than provided, cash from
  operations and has an accumulated deficit of approximately $18,235,538 as of
  December 31, 2006, which raises substantial doubt about its ability to continue
  as a going concern. Management’s plans in regard to these matters are
  also described in Note 1. The financial statements do not include any adjustments
  that might result from the outcome of this uncertainty.

/s/ Dohan and Company, CPAs, P.A.

Miami, Florida
  March 31, 2007



- 18 -

---

|ARVANA INC. AND SUBSIDIARIES                            
|--------------------------------------------------------
|(A DEVELOPMENT STAGE COMPANY)                           
|CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2007 AND 2006
|(EXPRESSED IN US DOLLARS)                               

|                                                                                          |   |              |   |   |              |  
|----------------------------------------------------------------------------------------- | - | ------------ | - | - | ------------ | -
|                                                                                          |   | December 31, |   |   | December 31, |  
|                                                                                          |   | 2007         |   |   | 2006         |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   |              |   |   |              |  
|ASSETS                                                                                    |   |              |   |   |              |  
|                                                                                          |   |              |   |   |              |  
|Current                                                                                   |   |              |   |   |              |  
|Cash and cash equivalents                                                                 | $ | 2,913        |   | $ | 233,452      |  
|Receivables (net
      of allowance of $NIL, December 31, 2006 $32,355)                   |   | -            |   |   | 1,676,177    |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   | 2,913        |   |   | 1,909,629    |  
|                                                                                          |   |              |   |   |              |  
|Long-term                                                                                 |   |              |   |   |              |  
|Deferred income tax asset, net
      of valuation allowance of $737,531 (2006 - $599,370) |   | -            |   |   | -            |  
|Property and
      equipment (Note 6)                                                     |   | 702          |   |   | 730,686      |  
|Subscriber accounts (Note 5)                                                              |   | -            |   |   | 2,605,499    |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          | $ | 3,615        |   | $ | 5,245,814    |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   |              |   |   |              |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                      |   |              |   |   |              |  
|                                                                                          |   |              |   |   |              |  
|Current                                                                                   |   |              |   |   |              |  
|Accounts payable and accrued
      liabilities                                            | $ | 340,122      |   | $ | 3,018,784    |  
|Note payable                                                                              |   | 220,935      |   |   | 329,815      |  
|Amounts due to related parties
      (Note 7)                                             |   | 198,517      |   |   | 47,551       |  
|Loans Payable
      (Note 7)                                                              |   | 360,672      |   |   | -            |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   | 1,120,246    |   |   | 3,396,150    |  
|                                                                                          |   |              |   |   |              |  
|Long-term                                                                                 |   |              |   |   |              |  
|Deferred income taxes                                                                     |   | -            |   |   | 59,159       |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   | 1,120,246    |   |   | 3,455,309    |  
|                                                                                          |   |              |   |   |              |  
|Stockholders' equity                                                                      |   |              |   |   |              |  
|Common stock
      (Note 8)                                                               |   |              |   |   |              |  
|100,000,000 common
      shares authorized at $0.001 par value;                           |   |              |   |   |              |  
|21,202,375 common shares issued and outstanding (December 31, 2006 -
      20,718,375)    |   | 21,203       |   |   | 20,719       |  
|Additional paid-in capital                                                                |   | 20,897,501   |   |   | 20,160,185   |  
|Deficit                                                                                   |   | (95,331      | ) |   | (95,331      | )
|Deficit accumulated during the
      development stage                                    |   | (21,656,668  | ) |   | (18,235,538  | )
|Accumulated
      other comprehensive loss                                                |   | -            |   |   | (59,530      | )
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   | (833,295     | ) |   | 1,790,505    |  
|Less: Treasury stock - 3,541,700
      common shares (2006 - Nil)                         |   | (283,336     | ) |   | -            |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          |   | (1,116,631   | ) |   | 1,790,505    |  
|                                                                                          |   |              |   |   |              |  
|                                                                                          | $ | 3,615        |   | $ | 5,245,814    |  

The accompanying notes are an integral part of these
consolidated financial statements.

- 19 -

---

|ARVANA INC. AND SUBSIDIARIES        
|------------------------------------
|(A DEVELOPMENT STAGE COMPANY)       
|CONSOLIDATED STATEMENT OF OPERATIONS
|(EXPRESSED IN US DOLLARS)           

|                                                           |   |                    |   |   |                      |   |   |                           |  
|---------------------------------------------------------- | - | ------------------ | - | - | -------------------- | - | - | ------------------------- | -
|                                                           |   |                    |   |   |                      |   |   | Cumulative amounts        |  
|                                                           |   |                    |   |   |                      |   |   | from the beginning of the |  
|                                                           |   | For the year ended |   |   | development stage on |  
|                                                           |   | December 31,       |   |   | January 1, 2005 to   |  
|                                                           |   | 2007               |   |   | 2006                 |   |   | December 31, 2007         |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Sales                                                      | $ | 4,740,895          |   | $ | 2,832,819            |   | $ | 7,573,714                 |  
|Cost of sales                                              |   | (3,654,429         | ) |   | (2,242,209           | ) |   | (5,896,638                | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Gross profit                                               |   | 1,086,466          |   |   | 590,610              |   |   | 1,677,076                 |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Operating expenses                                         |   |                    |   |   |                      |   |   |                           |  
|Selling and promotion                                      |   | (67,329            | ) |   | (120,749             | ) |   | (188,078                  | )
|General and administrative                                 |   | (1,228,593         | ) |   | (1,703,035           | ) |   | (3,711,453                | )
|Research and
      development                             |   | -                  |   |   | (117,249             | ) |   | (170,083                  | )
|Depreciation                                               |   | (198,405           | ) |   | (71,117              | ) |   | (269,722                  | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Operating loss                                             |   | (407,861           | ) |   | (1,421,540           | ) |   | (2,662,260                | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Other items                                                |   |                    |   |   |                      |   |   |                           |  
|Stock-based
      compensation (Note 8)                    |   | (662,800           | ) |   | (232,400             | ) |   | (9,308,490                | )
|Loss on write-off of equipment (Note 4)                    |   | (37,196            | ) |   | (30,602              | ) |   | (67,798                   | )
|Loss on acquisition of
      Arvana Networks (Note 3)      |   | -                  |   |   | -                    |   |   | (7,013,310                | )
|Loss on acquisition of Arvana Com (Note
      4)           |   | -                  |   |   | (45,888              | ) |   | (279,037                  | )
|Loss on bad debt
      expense (Note 4)                    |   | (58,411            | ) |   | -                    |   |   | (58,411                   | )
|Loss on disposal of Hallotel                               |   | (2,239,014         | ) |   | -                    |   |   | (2,239,014                | )
|Other income                                               |   | 9,425              |   |   | -                    |   |   | 9,425                     |  
|Gain on debt settlement                                    |   | 75,000             |   |   | -                    |   |   | 75,000                    |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Net loss before income taxes                               |   | (3,320,855         | ) |   | (1,730,430           | ) |   | (21,543,893               | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Income taxes                                               |   | (54,535            | ) |   | (12,500              | ) |   | (67,035                   | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Net loss for the
      period                              | $ | (3,375,390         | ) | $ | (1,742,930           | ) | $ | (21,610,928               | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Other comprehensive gain (loss)                            |   | 13,790             |   |   | (59,530              | ) |   | (45,740                   | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Comprehensive
      loss for the period                    | $ | (3,361,600         | ) | $ | (1,802,460           | ) | $ | (21,656,668               | )
|                                                           |   |                    |   |   |                      |   |   |                           |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Loss per share - basic and diluted                         | $ | (0.16              | ) | $ | (0.10                | ) |   |                           |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|                                                           |   |                    |   |   |                      |   |   |                           |  
|Weighted
      average number of common shares outstanding |   | 20,670,083         |   |   | 17,170,283           |   |   |                           |  

The accompanying notes are an integral part of these
consolidated financial statements.

- 20 -

---

|ARVANA INC. AND SUBSIDIARIES        
|------------------------------------
|(A DEVELOPMENT STAGE COMPANY)       
|CONSOLIDATED STATEMENT OF CASH FLOWS
|(EXPRESSED IN US DOLLARS)           

|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|--------------------------------------------------------------------------------------------------- | - | ------------------ | - | - | -------------------- | - | - | ------------------------- | -
|                                                                                                    |   |                    |   |   |                      |   |   | Cumulative amounts        |  
|                                                                                                    |   |                    |   |   |                      |   |   | from the beginning of the |  
|                                                                                                    |   | For the year ended |   |   | development stage on |  
|                                                                                                    |   | December 31,       |   |   | January 1, 2005 to   |  
|                                                                                                    |   | 2007               |   |   | 2006                 |   |   | December 31, 2007         |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Cash flows from operating activities                                                                |   |                    |   |   |                      |   |   |                           |  
|Net loss for the period                                                                             | $ | (3,375,390         | ) | $ | (1,742,930           | ) | $ | (21,610,928               | )
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Items not involving cash:                                                                           |   |                    |   |   |                      |   |   |                           |  
|Depreciation and amortization                                                                       |   | 198,405            |   |   | 71,117               |   |   | 269,722                   |  
|Stock-based
      compensation                                                                      |   | 662,800            |   |   | 232,400              |   |   | 9,308,490                 |  
|Loss on acquisition of Arvana Networks                                                              |   | -                  |   |   | -                    |   |   | 7,013,310                 |  
|Loss on
      acquisition of Arvana Comunicacoes                                                    |   | -                  |   |   | 45,888               |   |   | 279,037                   |  
|Loss on write-off of equipment                                                                      |   | 37,196             |   |   | 30,602               |   |   | 67,798                    |  
|Loss on bad debt
      expense                                                                      |   | 58,411             |   |   | -                    |   |   | 58,411                    |  
|Gain on debt settlement                                                                             |   | (75,000            | ) |   | -                    |   |   | (75,000                   | )
|Loss on disposal
      of Hallotel                                                                  |   | 2,239,014          |   |   | -                    |   |   | 2,239,014                 |  
|Deferred income taxes                                                                               |   | (27,714            | ) |   | 59,008               |   |   | 31,294                    |  
|Changes in non-cash working capital:                                                                |   |                    |   |   |                      |   |   |                           |  
|Receivables                                                                                         |   | 63,698             |   |   | (595,390             | ) |   | (503,998                  | )
|Accounts payable
      and accrued liabilities                                                      |   | (398,120           | ) |   | 1,898,953            |   |   | 1,449,692                 |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Net cash used in operations                                                                         |   | (616,700           | ) |   | (352                 | ) |   | (1,473,158                | )
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Cash flows from investing activities                                                                |   |                    |   |   |                      |   |   |                           |  
|Acquisition of equipment                                                                            |   | (89,920            | ) |   | (249,814             | ) |   | (378,751                  | )
|Proceeds of sale of
      equipment                                                                 |   | 3,702              |   |   | -                    |   |   | 3,702                     |  
|Cash portion of Investment in BCH
      Beheer / Hallotel                                           |   | -                  |   |   | (1,445,235           | ) |   | (1,445,235                | )
|Cash of Hallotel on
      disposition date                                                          |   | (53,136            | ) |   |                      |   |   | (53,136                   | )
|Cash of BCH Beheer / Hallotel on
      acquisition date                                             |   | -                  |   |   | 105,659              |   |   | 105,659                   |  
|Cash of Arvana Networks
      on acquisition date                                                   |   | -                  |   |   | -                    |   |   | 5,800                     |  
|Cash of Arvana Comunicacoes on
      acquisition date                                               |   | -                  |   |   | -                    |   |   | 62,465                    |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Net cash used in investing activities                                                               |   | (139,354           | ) |   | (1,589,390           | ) |   | (1,699,496                | )
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Cash flows from financing activities                                                                |   |                    |   |   |                      |   |   |                           |  
|Advances from (to) related parties                                                                  |   | 150,966            |   |   | 70,160               |   |   | (239,334                  | )
|Proceeds of loan
      payable                                                                      |   | 360,672            |   |   | -                    |   |   | 360,672                   |  
|Contribution to capital                                                                             |   | -                  |   |   | -                    |   |   | 900                       |  
|Proceeds from issuance
      of common stock, net of finders' fees                                  |   | -                  |   |   | 976,500              |   |   | 3,097,750                 |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Net cash provided by
      financing activities                                                     |   | 511,638            |   |   | 1,046,660            |   |   | 3,219,988                 |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Effect of exchange rate changes on cash and cash
      equivalents                                  |   | 13,877             |   |   | (59,530              | ) |   | (45,653                   | )
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Increase (decrease) in cash and cash equivalents                                                    |   | (230,539           | ) |   | (602,612             | ) |   | 1,681                     |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Cash and cash equivalents, beginning of period                                                      |   | 233,452            |   |   | 836,064              |   |   | 1,232                     |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Cash and cash
      equivalents, end of period                                                      | $ | 2,913              |   | $ | 233,452              |   | $ | 2,913                     |  
|                                                                                                    |   | 0                  |   |   |                      |   |   |                           |  
|                                                                                                    |   | 2,913              |   |   |                      |   |   |                           |  
|Supplementary information                                                                           |   |                    |   |   |                      |   |   |                           |  
|Interest paid                                                                                       | $ | 3,436              |   | $ | 7,246                |   |   |                           |  
|Taxes paid                                                                                          |   | 168                |   |   | -                    |   |   |                           |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Transactions not involving cash                                                                     |   |                    |   |   |                      |   |   |                           |  
|Write-off of software associated with
      the disposal of Hallotel                                |   | 64,104             |   |   | -                    |   |   |                           |  
|Issuance of stock for
      settlement of debt; 500,000 shares of common stock                      |   | 75,000             |   |   | -                    |   |   |                           |  
|Decrease in accounts payable due to
      Brulex due to disposal of Hallotel                        |   | 338,236            |   |   | -                    |   |   |                           |  
|Decrease in note
      payable due to Brulex due to disposal of Hallotel                            |   | 108,880            |   |   | -                    |   |   |                           |  
|Loss of receivables due to Hallotel
      disposal                                                  |   | 1,554,068          |   |   | -                    |   |   |                           |  
|Loss of property and
      equipment due to Hallotel disposal                                       |   | 516,497            |   |   | -                    |   |   |                           |  
|Loss of accounts payable and accrued
      liabilities due to Hallotel disposal                     |   | 1,867,306          |   |   | -                    |   |   |                           |  
|Loss of deferred income
      tax liability due to Hallotel disposal                                |   | 31,445             |   |   | -                    |   |   |                           |  
|                                                                                                    |   |                    |   |   |                      |   |   |                           |  
|Common shares cancelled
      due to disposal of Hallotel (3,541,700 @ $0.08)                       |   | 283,336            |   |   | -                    |   |   |                           |  
|Common shares issued for services
      (451,875 @ $0.40)                                           |   | -                  |   |   | 180,750              |   |   |                           |  
|Common shares issued
      for acquisition of BCH Beheer / Hallotel (3,541,700 @ $0.40)             |   | -                  |   |   | 1,416,680            |   |   |                           |  
|Common shares issued for finders fees
      for BCH Beheer / Hallotel Acquisition (208,300 @ $0.40) |   | -                  |   |   | 83,320               |   |   |                           |  

The accompanying notes are an integral part of these
consolidated financial statements.

- 21 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A DEVELOPMENT STAGE COMPANY)                 
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
|(EXPRESSED IN US DOLLARS)                     

|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|-------------------------------------------------------------------------------------------------- |  | ------------ | - | - | -------------- | - |  | ---------- | - | - | -------- | - | - | --------------- | - | - | ------- | - | - | ----------- | - | - | ---------------- | - | - | ------------- | -
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|                                                                                                   |  | Common Stock |   |   | Treasury Stock |   |  |            |   |   |          |   |   | Deficit         |   |   |         |   |   |             |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   | Accumulated |   |   |                  |   |   |               |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   | during the  |   |   | Accumlated other |   |   | Total         |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   | Additional      |   |   |         |   |   | development |   |   | comprehensive    |   |   | Stockholders' |  
|                                                                                                   |  | Shares       |   |   | Amount         |   |  | Shares     |   |   | Amount   |   |   | Paid-in Capital |   |   | Deficit |   |   | stage       |   |   | loss             |   |   | Equity        |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|From inception to December
      31, 2004                                                          |  | 8,253,000    |   | $ | 8,253          |   |  | -          |   | $ | -        |   | $ | 88,310          |   | $ | (95,331 | ) | $ | -           |   | $ | -                |   | $ | 1,232         |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|Contribution to capital                                                                            |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | 900             |   |   | -       |   |   | -           |   |   | -                |   |   | 900           |  
|Return and cancellation
      of common stock - March 2005                                         |  | (1,350,000   | ) |   | (1,350         | ) |  | -          |   |   | -        |   |   | 1,350           |   |   | -       |   |   | -           |   |   | -                |   |   | -             |  
|Issuance
      of common stock for cash at $0.10 - May 2005                                        |  | 3,000,000    |   |   | 3,000          |   |  | -          |   |   | -        |   |   | 5,997,000       |   |   | -       |   |   | -           |   |   | -                |   |   | 6,000,000     |  
|Issuance of common stock
      for cash at $1.25 - July 2005                                       |  | 400,000      |   |   | 400            |   |  | -          |   |   | -        |   |   | 911,600         |   |   | -       |   |   | -           |   |   | -                |   |   | 912,000       |  
|Return
      and cancellation of common stock - August 2005                                        |  | (1,017,000   | ) |   | (1,017         | ) |  | -          |   |   | -        |   |   | 1,017           |   |   | -       |   |   | -           |   |   | -                |   |   | -             |  
|Issuance of common stock
      for cash at $1.25 - August 2005                                     |  | 792,000      |   |   | 792            |   |  | -          |   |   | -        |   |   | 1,804,968       |   |   | -       |   |   | -           |   |   | -                |   |   | 1,805,760     |  
|Issuance
      of common stock for finders fee at $2.28 - August 2005                              |  | 330,000      |   |   | 330            |   |  | -          |   |   | -        |   |   | 752,070         |   |   | -       |   |   | -           |   |   | -                |   |   | 752,400       |  
|Issuance of common stock
      in transaction with Arvana Networks at $2.28 - August 2005          |  | 3,000,000    |   |   | 3,000          |   |  | -          |   |   | -        |   |   | 6,837,000       |   |   | -       |   |   | -           |   |   | -                |   |   | 6,840,000     |  
|Finders
      fees paid in cash - July, August, September 2005                                     |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | (164,000        | ) |   | -       |   |   | -           |   |   | -                |   |   | (164,000      | )
|Issuance of common stock
      for cash at $1.25 - October 2005                                    |  | 440,000      |   |   | 440            |   |  | -          |   |   | -        |   |   | 1,002,760       |   |   | -       |   |   | -           |   |   | -                |   |   | 1,003,200     |  
|Issuance
      of common stock for finders fee at $2.28 - October 2005                             |  | 43,500       |   |   | 44             |   |  | -          |   |   | -        |   |   | 99,137          |   |   | -       |   |   | -           |   |   | -                |   |   | 99,181        |  
|Finders fees paid in cash
      - October 2005                                                     |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | (54,750         | ) |   | -       |   |   | -           |   |   | -                |   |   | (54,750       | )
|Net
      operating loss for the year ended December 31, 2005                                      |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | -               |   |   |         |   |   | (16,492,608 | ) |   | -                |   |   | (16,492,608   | )
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|Balance December 31,
      2005                                                                    |  | 13,891,500   |   | $ | 13,892         |   |  | -          |   | $ | -        |   | $ | 17,277,362      |   | $ | (95,331 | ) | $ | (16,492,608 | ) | $ | -                |   | $ | 703,315       |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|Stock-based compensation                                                                           |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | 232,400         |   |   | -       |   |   | -           |   |   | -                |   |   | 232,400       |  
|Issuance of common stock
      for acquisition of BCH Beheer / Hallotel, including transaction fee |  | 3,750,000    |   |   | 3,750          |   |  | -          |   |   | -        |   |   | 1,496,250       |   |   | -       |   |   | -           |   |   | -                |   |   | 1,500,000     |  
|Issuance
      of common stock for cash at $0.40                                                   |  | 2,625,000    |   |   | 2,625          |   |  | -          |   |   | -        |   |   | 1,047,375       |   |   | -       |   |   | -           |   |   | -                |   |   | 1,050,000     |  
|Issuance of common stock
      for services at $0.40                                               |  | 451,875      |   |   | 452            |   |  | -          |   |   | -        |   |   | 180,298         |   |   | -       |   |   | -           |   |   | -                |   |   | 180,750       |  
|Finders
      fees paid in cash                                                                    |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | (73,500         | ) |   | -       |   |   | -           |   |   | -                |   |   | (73,500       | )
|Net operating loss for
      the year ended December 31, 2006                                      |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | -               |   |   | -       |   |   | (1,742,930  | ) |   | -                |   |   | (1,742,930    | )
|Foreign
      currency translation adjustment                                                      |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | -               |   |   | -       |   |   | -           |   |   | (59,530          | ) |   | (59,530       | )
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|Balance December 31,
      2006                                                                    |  | 20,718,375   |   | $ | 20,719         |   |  | -          |   | $ | -        |   | $ | 20,160,185      |   | $ | (95,331 | ) | $ | (18,235,538 | ) | $ | (59,530          | ) | $ | 1,790,505     |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|Stock-based compensation                                                                           |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | 662,800         |   |   | -       |   |   | -           |   |   | -                |   |   | 662,800       |  
|Return and cancellation
      of common stock                                                      |  | (16,000      | ) |   | (16            | ) |  | -          |   |   | -        |   |   | 16              |   |   | -       |   |   | -           |   |   | -                |   |   | -             |  
|Issuance
      of common stock for debt settlement                                                 |  | 500,000      |   |   | 500            |   |  | -          |   |   | -        |   |   | 74,500          |   |   | -       |   |   | -           |   |   | -                |   |   | 75,000        |  
|Treasury stock acquired
      on disposal of subsidiary                                            |  | -            |   |   | -              |   |  | (3,541,700 | ) |   | (283,336 | ) |   |                 |   |   | -       |   |   | (45,740     | ) |   | 45,740           |   |   | (283,336      | )
|Net
      operating loss for the year ended December 31, 2007                                      |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | -               |   |   | -       |   |   | (3,375,390  | ) |   | -                |   |   | (3,375,390    | )
|Foreign currency
      translation adjustment                                                      |  | -            |   |   | -              |   |  | -          |   |   | -        |   |   | -               |   |   | -       |   |   | -           |   |   | 13,790           |   |   | 13,790        |  
|                                                                                                   |  |              |   |   |                |   |  |            |   |   |          |   |   |                 |   |   |         |   |   |             |   |   |                  |   |   |               |  
|Balance December 31, 2007                                                                          |  | 21,202,375   |   | $ | 21,203         |   |  | (3,541,700 | ) | $ | (283,336 | ) | $ | 20,897,501      |   | $ | (95,331 | ) | $ | (21,656,668 | ) | $ | -                |   | $ | (1,116,631    | )

The accompanying notes are an integral part of these
consolidated financial statements.

- 22 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

1. Nature of Business and Ability to Continue as a Going
Concern

Arvana Inc., (the Company) was incorporated under the laws of
the State of Nevada as Turinco, Inc. on September 16, 1977, with authorized
common stock of 2,500 shares with a par value of $0.25. On October 16, 1998, the
authorized capital stock was increased to 100,000,000 shares with a par value of
$0.001. On July 24, 2006, the shareholders approved a change of the Companys
name from Turinco, Inc. to Arvana Inc.

In 1998, the Company completed a common stock split of eight
shares for each outstanding share. In 2005, the Company completed another common
stock split of nine shares for each outstanding share. These consolidated
financial statements have been prepared showing after stock split shares with a
par value of $0.001.

These consolidated financial statements for the year ended
December 31, 2007 include the accounts of the Company, its subsidiary Arvana
Networks (including its wholly-owned subsidiaries Arvana Par and Arvana
Comunicações do Brasil S. A. (Arvana Com) and BCH Beheer (and its wholly-owned
subsidiary Hallotel Deutschland GmbH up to its date of disposal on December 7,
2007). The Company has ceased all operations in its subsidiary companies, and
has written-off or disposed of all assets in the subsidiary companies,
consequently they are now all considered to be inactive subsidiaries.

These consolidated financial statements have been prepared on a
going concern basis, which assumes the realization of assets and settlement of
liabilities in the normal course of business. For the year ended December 31,
2007, the Company incurred a loss from operations of $3,375,390. At December 31,
2007, the Company had a working capital deficiency of $1,117,333. These
conditions raise substantial doubt about the Companys ability to continue as a
going concern.

Accordingly, the Company will require continued financial
support from its shareholders and creditors until it is able to generate
sufficient cash flow from operations on a sustained basis. There is substantial
doubt that the Company will be successful at achieving these results. Failure to
obtain the ongoing support of its shareholders and creditors may make the going
concern basis of accounting inappropriate, in which case the Companys assets
and liabilities would need to be recognized at their liquidation values. These
financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts and classification
of liabilities that might arise from this uncertainty.

2. Summary of Significant Accounting Policies

a) Basis of presentationThe Company began to
generate revenues as a result of the acquisition of Hallotel during the final
four months of 2006. In 2007 the Company commenced its planned principal
operations and determined its target market segments and market strategies.
Consequently, the Company exited the development stage during early 2007. The
Company then disposed of Hallotel in December 2007 and ceased all operations in
its subsidiary companies. The Company is again in the process of evaluating
business opportunities and has returned to the development stage and presents
its financial statements in accordance with Statement of Financial Accounting
Standard (SFAS) No. 7, Accounting and Reporting by Development Stage
Enterprises. The Companys fiscal year end is December 31. The accompanying
consolidated financial statements of Arvana Inc. for the years ended December
31, 2007 and 2006, and for the cumulative amounts from the beginning of the
development stage on January 1, 2005, through December 31, 2007, have been
prepared in accordance with accounting principles generally accepted in the
United States for financial information with the instructions to Form 10-KSB and
Regulation S-B. In the opinion of management, they include all adjustments,
consisting only of normal recurring items, necessary for a fair presentation.
Results are not necessarily indicative of results which may be achieved in the
future.

- 23 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

b) Basis of consolidationIncluded in the financial
statements are the accounts of the Company, its wholly-owned subsidiaries Arvana
Networks, Arvana Par, Arvana Com, and BCH Beheer. The accounts of the Companys
formerly wholly-owned subsidiary, Hallotel, are included up to the date of its
disposal on December 7, 2007. All significant inter-company transactions and
balances have been eliminated.

c) EstimatesThe preparation of consolidated
financial statements in conformity with US GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.

d) Foreign currency translation and transactionsThe
Company uses the temporal method when translating the Brazilian subsidiary
operations. Long-term assets and liabilities denominated in a foreign currency
are translated into US dollars at the exchange rate in effect on the transaction
date. Revenue and expenses are translated at the average rates of exchange
prevailing during the periods. The cumulative effects of these translation
adjustments were included in administration expenses as they were
insignificant.

The Company used the current rate method when translating its
former German subsidiary operations Hallotel. All assets and liabilities
denominated in a foreign currency are translated into US dollars at the exchange
rate in effect on the balance sheet date. Revenue and expenses are translated at
the average rates of exchange prevailing during the periods. The cumulative
effects of these translation adjustments are presented as a component of
comprehensive income.

Transactions conducted in foreign currencies are recorded using
the exchange rate in effect on the transaction date. At the period end, monetary
assets and liabilities are translated to the functional currency of each entity
using the exchange rate in effect at the period end date. Transaction gains and
losses are recorded in foreign exchange gain or loss in administration expenses
as they were insignificant.

The exchange rate prevailing at December 31, 2007, was 1.7741,
stated in the Brazilian Real per one US dollar. The average exchange rate during
the twelve-month period ended December 31, 2007, was 1.9516 stated in the
Brazilian Real per one US dollar. For the Euro, the exchange rate prevailing at
December 31, 2007, was 0.6789 US dollars per Euro and the average exchange rate
during the twelve-month period ended December 31, 2007, was 0.7296 US dollars
per Euro.

e) Revenue recognitionThe Company records revenues
upon the completion of the services and where the ability to collect is
reasonably assured.

f) Comprehensive incomeThe Company has adopted SFAS
No. 130, Reporting Comprehensive Income, which establishes standards for
reporting and presentation of comprehensive income, its components and
accumulated balances.

g) Cash equivalentsThe Company considers all highly
liquid investments, with terms to maturity of three months or less when
acquired, to be cash equivalents.

- 24 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

h) Accounts receivableTrade and other accounts
receivable are reported at face value less any provisions for uncollectible
accounts considered necessary. Accounts receivable primarily includes trade
receivables from customers. The Company estimates doubtful accounts on an
item-by-item basis and includes over aged accounts as part of the allowance for
doubtful accounts, which are generally ones that are ninety days or greater
overdue.

i) Property and equipment:Property and equipment is
stated at cost less accumulated depreciation and is depreciated on a straight
line basis, commencing when the assets are put into use over the estimated
useful lives of the assets as follows:

| | Machinery & equipment | 10 years   
| | --------------------- | -----------
| | Office equipment      | 3  5 years
| | Computer hardware     | 5 years    
| | Software              | 1  4 years

In accordance with SFAS 144, Accounting for Impairment or
Disposal of Long-Lived Assets, the Company reviews the carrying value of
long-lived assets for impairment whenever events and circumstances indicate that
the carrying value of the assets might be impaired and the carrying value may
not be recoverable. Recoverability of these assets is measured by comparison of
the carrying value of the assets to the undiscounted cash flows estimated to be
generated by those assets over the remaining economic life. If the undiscounted
cash flows are not sufficient to recover the carrying value of such assets, the
assets are considered impaired. The impairment loss is measured by comparing the
fair value of the assets to their carrying values. Fair value is determined by
either a quoted market price or a value determined by a discounted cash flow
technique, whichever is more appropriate under the circumstances involved. No
impairment was required to be recorded during the periods presented in these
consolidated financial statements.

j) Impairment of long-lived assets and long-lived assets to
be disposed of:Long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net cash flows
expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.

k) Financial instrumentsFinancial instruments of the
Company are comprised of cash and cash equivalents, receivables, accounts
payable and accrued liabilities, note payable, and amounts due to and from
related parties. The estimated fair values of financial instruments were
considered by management to be not materially different from their carrying
values due to their short term to maturity or capacity for prompt
liquidation.

l) Concentration of credit riskFinancial instruments
that potentially subject the company to concentrations of credit risk consist
principally of cash equivalents and trade accounts receivable. Trade accounts
receivable in the Companys operation in Germany consists of amounts from the
carrier preselect customers and amounts from the wholesale carrier customers.
The receivable from the carrier preselect customers is distributed among many
customers. The receivable from the wholesale customers is considered a credit
risk however with some customers, traffic is traded therefore the risk is
mitigated by the accounts payable to those customers. The Company maintains cash
in bank accounts that, at times, may exceed federally insured limits. The
Company has not experienced any losses in such accounts and believes it is not
exposed to any significant risks on its cash in bank accounts.

- 25 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

m) Asset retirement obligationsThe Company records
the fair value of an asset retirement obligation as a liability in the period in
which it incurs a legal obligation associated with the retirement of tangible
long-lived assets that result from the acquisition, construction, development,
and/or normal use of the long-lived assets. The Company also records a
corresponding asset which is amortized over the life of the asset. Subsequent to
the initial measurement of the asset retirement obligation, the obligation is
adjusted at the end of each period to reflect the passage of time (accretion
expense) and changes in the estimated future cash flows underlying the
obligation (asset retirement cost). The Company does not have any asset
retirement obligations for the periods presented.

n) Income taxesIncome taxes are provided in
accordance with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes". A deferred tax asset or liability is
recorded for all temporary differences between financial and tax reporting and
net operating loss carry-forwards. Deferred tax expense (benefit) results from
the net change during the year of deferred tax assets and liabilities.

Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion or
all of the deferred tax assets will not be realized. Deferred tax assets and
liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment.

o) Stock-based compensationThe Company accounts for
all stock-based payments to employees and non-employees under SFAS No. 123R,
Accounting for Stock-Based Compensation, using the fair value based method.
Under the fair value method, stock-based payments are measured at the fair value
of the consideration received, or the fair value of the equity instruments
issued, or liabilities incurred, whichever is more reliably measurable. The cost
of stock-based payments to non-employees that are fully vested and
non-forfeitable at the grant date is measured and recognized at that date.

p) Net loss per shareBasic loss per share is
computed using the weighted average number of common shares outstanding during
the year. Diluted loss per share is computed using the weighted average number
of common shares and potentially dilutive common stock equivalents, including
stock options and warrants. As at December 31, 2007, the Company had 1,600,000
of potentially dilutive instruments that were excluded from the determination of
diluted loss per share as they would be anti-dilutive.

q) ReclassificationsCertain of the comparative
figures for the prior year have been reclassified to conform with the
presentation adopted in the current year.

r) Recent accounting pronouncementsIn September
2006, the Financial Accounting Standards Board (FASB) issued SFAS No. 157,
Fair Value Measurements. SFAS No. 157 establishes a framework for measuring
the fair value of assets and liabilities. This framework is intended to provide
increased consistency in how fair value determinations are made under various
existing accounting standards which permit, or in some cases require, estimates
of fair market value. SFAS No. 157 is effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. Earlier
application is encouraged, provided that the reporting entity has not yet issued
financial statements for that fiscal year, including any financial statements
for an interim period within that fiscal year.

In February 2007, the FASB issued SFAS No. 159, The Fair Value
Option for Financial Assets and Financial Liabilities  Including an Amendment
of FASB Statement No. 115. This statement permits entities to choose to measure
many financial instruments and certain other items at fair value. Most of the

- 26 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

provisions of SFAS No. 159 apply only to entities that elect
the fair value option. However, the amendment to SFAS No. 115 Accounting for
Certain Investments in Debt and Equity Securities applies

to all entities with available-for-sale and trading securities.
SFAS No. 159 is effective as of the beginning of an entitys first fiscal year
that begins after November 15, 2007. Early adoption is permitted as of the
beginning of a fiscal year that begins on or before November 15, 2007, provided
the entity also elects to apply the provision of SFAS No. 157, Fair Value
Measurements.

The Company does not expect that the adoption of these new
accounting pronouncements will have a significant effect on its financial
statements.

3. Arvana Networks Transaction

On August 18, 2005, Arvana Inc. (Arvana) completed a
transaction with Arvana Networks whereby 100% of the 4,500,000 shares (1,500,000
shares of which are described below) of Arvana Networks were exchanged for an
equal number of shares in Arvana Inc.

Arvana Networks had an agreement with IP Horizon LLC (IPH),
whereby IPH was issued 1,500,000 shares in exchange for a commitment to deliver
equipment, software and network hardware for the initial launching of VoIP
service in Brazil.

As at December 31, 2006, the Company had not received the full
complement of assets to be acquired in connection with this transaction or other
consideration. Accordingly, the 1,500,000 shares were not reflected on our
financial statements as having been issued. In 2007 the following agreement was
reached with IPH with respect to this transaction:

| | i.   | IPH returned to the Company for cancellation the
      1,500,000 common shares of Arvana issued to IPH in August 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii.  | IPH had contributed certain equipment to, and had
      developed certain software for, the Company, with an agreed upon value of
      $150,000. In settlement of the debt due from the contribution of the
      aforementioned equipment and software architecture services from IPH to
      Arvana and Arvana Networks, during 2007 the Company issued 500,000 common
      shares at an agreed price of $0.30 per share. The shares were recorded as
      being issued at a price of $0.15 per share, the price of the Companys
      shares at the date of entering into the debt settlement agreement, giving
      rise to a gain on settlement of debt of $75,000.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | iii. | As both Arvana and Arvana Networks are development stage
      companies, the share exchange transaction was outside the scope of
      Statement of Financial Accounting Standard No. 141, Business
      Combination. Consequently, the transaction was recorded at the fair value
      of the 3.0 million Arvanas common shares issued for the transaction based
      on the quoted market price of the Companys common stock on the date of
      the agreement of $2.28 per share. This agreed upon consideration paid for
      the transaction was calculated based on the fair value of the assets
      recorded on Arvana Networks financial statements at the time of the
      transaction and on the compensation expenses given to management of Arvana
      Networks for pre-operating services provided to Arvana Networks and to
      retain their services. As such, the purchase price of the transaction was
      allocated among the $5,800 in cash and $131,747 in other assets acquired
      and $310,857 in liabilities assumed based on the fair value and the excess
      of purchase price over fair value of assets acquired and liabilities
      assumed was recorded in 2005 as compensation expense paid of $7,013,310 to
      the management of Arvana Networks at the time of the
  transaction.

- 27 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

4. Arvana Comunicações Transaction

On October 6, 2005, the Company, through its wholly-owned
subsidiaries, completed the first closing of an investment agreement with
Gloinfo 500 Soluções EM Telemática Ltda. (Gloinfo) and Paulo Messina
(described below) for the acquisition of Arvana Comunicações.

In early 2006, management entered into negotiations with the
principals of Gloinfo with the intention of terminating the Investment Agreement
by mutual agreement. On October 31, 2006 the Company signed a definitive
agreement with Gloinfo pursuant to which the Investment Agreement was
terminated. The main terms of the termination of the Investment Agreement that
have been agreed to by Gloinfo were as follows:

| | i.   | The terms of the Investment Agreement have been cancelled
      and Gloinfo transferred its 25% ownership to Arvana Par.                                                                                                                                  
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii.  | The customers that were to be transferred to Arvana Com
      under the terms of the agreement remained with Gloinfo.                                                                                                                                     
| | iii. | The employees that were to be transferred under the terms
      of the agreement remained with Gloinfo.                                                                                                                                                   
| | iv.  | Employees that were hired into the project were
      terminated and the termination costs were shared 75% by Arvana Com and 25%
      by Gloinfo.                                                                                                        
| | v.   | Arvana Com obtained the Televoz branding and the
      website associated with this product from Gloinfo.                                                                                                                                               
| | vi.  | Arvana Com retained ownership and operating control of
      the technology platform used by Gloinfo to service their customers.
      Gloinfo purchased and installed a new technology platform and was to
      return the original equipment to Arvana.

During 2007 the Company determined that an advance of $58,411
that it had made to Gloinfo was uncollectible and wrote it off as bad debt
expense. During 2007 the Company also wrote-off $37,196 in property and
equipment held by Gloinfo that the Company determined was unrecoverable.

5. BCH Beheer and Hallotel Deutschland GmbH
Transactions

On August 9, 2006 the Company, Brulex  Consultadoria Economica
E Marketing Ltda. (Brulex) and Hallotel Deutschland GmbH (Hallotel) entered
into a share purchase agreement (the Share Purchase Agreement) pursuant to
which the Company acquired control over Hallotel through the acquisition (the
Acquisition) of all of the outstanding shares of BCH Beheer B.V., a
wholly-owned subsidiary of the Vendor that owned all of the outstanding shares
of Hallotel. The purchase price for the Acquisition was paid by way of:

| | i.   | the issue of 3,541,700 shares of common stock of the
      Company, valued at $0.40 per share;                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii.  | the payment of €500,000 in cash; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | iii. | the issuance of a promissory note in the principal amount
      of €250,000 provided that the promissory note will not be payable and will
      be deemed cancelled if certain information as set out in the Share
      Purchase Agreement to be delivered by Brulex to the Purchaser within 30
      days of the closing of the Acquisition relating to certain assets was not
      delivered or, if delivered, did not materially conform with information
      provided to the Company as at the date of the Share Purchase
    Agreement.

- 28 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

Pursuant to the Share Purchase Agreement, the purchase price
was increased by:

| | i.  | a payable to Brulex in the amount of €80,932 for the
      price actually paid by Hallotel for any telephone technology hardware or
      software assets acquired after October 19, 2005 and before the closing
      date of the Acquisition that are required for the provision of established
      Hallotel services to its customers; and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii. | a payable to Brulex in the amount of €277,630 for
      commissions paid by Hallotel to its salespersons in respect of carrier
      pre-select sign-ups on net new customers after October 19, 2005 and before
      the closing date of the Acquisition, as provided in the Share Purchase
      Agreement.                                  

Prior to the acquisition date, Arvana had paid $26,941 for
acquisition related expenses and this amount was included in the purchase price.
A transaction fee was paid by issuing 208,300 additional shares of common stock
of the Company, valued at $0.40 per share.

The purchase price of the transaction, with a value of
$2,948,003 was allocated as to $105,659 in cash, $1,080,529 in accounts
receivables, $15,371 in other current assets, $1,368,845 in accounts payable and
accrued liabilities and, $2,605,499 to the value of monthly subscribers held by
Hallotel at the time of the acquisition. Equipment valued at $500,915 and
software valued at $8,875 was held by Hallotel on the acquisition date.

On December 7, 2007, the Company entered into a settlement and
share purchase agreement with Brulex to dispose of the Companys subsidiary,
Hallotel. Under the terms of the agreement Brulex returned to the Company for
cancellation the 3,541,700 of its common shares issued for the acquisition of
BCH Beheer and Hallotel. The shares were valued at $283,336 based on the
Companys common share price of $0.08 on December 7, 2007. The amounts due to
Brulex under the terms of the original Acquisition were reduced by $447,116,
which consisted of accounts payable of $338,236 and note payable of $108,880, to
€225,000. The Company wrote off a receivable due from Hallotel in the amount of
$74,913 as well as software retained by Hallotel in the amount of $64,104. The
original investment in Hallotel by the Company of $2,948,003 was adjusted by the
effect of Hallotels operations from acquisition to disposal resulting in a net
decrease in the Companys retained earnings of $74,455 and an accumulated other
comprehensive loss of $43,099. The net effect of the above transactions resulted
in a loss of $2,239,014 upon disposal of Hallotel.

6. Property and Equipment

|At December 31, 2007: |   |       |  |   |              |  |   |                  | 
|--------------------- | - | ----- |  | - | ------------ |  | - | ---------------- | 
|                      |   |       |  |   |              |  |   |                  | 
|                      |   |       |  |   | Accumulated  |  |   | Net              | 
|                      |   | Cost  |  |   | Amortization |  |   | Book
      Value | 
|                      |   |       |  |   |              |  |   |                  | 
|Equipment             | $ | 1,502 |  | $ | 800          |  | $ | 702              | 

- 29 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

|At December 31,
      2006 |   |         |  |   |              |  |   |                  | 
|-------------------------- | - | ------- |  | - | ------------ |  | - | ---------------- | 
|                           |   |         |  |   |              |  |   |                  | 
|                           |   |         |  |   | Accumulated  |  |   | Net              | 
|                           |   | Cost    |  |   | Amortization |  |   | Book
      Value | 
|                           |   |         |  |   |              |  |   |                  | 
|Equipment                  | $ | 205,099 |  | $ | 16,284       |  | $ | 188,815          | 
|Computer hardware          |   | 502,667 |  |   | 52,797       |  |   | 449,870          | 
|Software                   |   | 94,237  |  |   | 2,236        |  |   | 92,001           | 
|                           |   |         |  |   |              |  |   |                  | 
|                           | $ | 802,003 |  | $ | 71,317       |  | $ | 730,686          | 

7. Related Parties and Loans Payable

On August 14, 2007, the Company received an unsecured, 6%
interest per annum loan from a shareholder of the Company in the amount of
$1,900 CAD ($1,917 USD). Repayment of the loan is due on closing of any future
financing arrangement by the Company. Accrued interest of $43 has been recorded
in accounts payable and accrued liabilities for the year ended December 31,
2007.

On June 1, 2007, the Company received an unsecured, 6% interest
per annum loan from a shareholder of the Company in the amount of $35,000 CAD
($35,308 USD). Repayment of the loan is due on closing of any future financing
arrangement by the Company. Accrued interest of $1,197 has been recorded in
accounts payable and accrued liabilities for the year ended December 31,
2007.

On February 20, 2007, the Company received an unsecured, 6%
interest per annum loan from a shareholder of the Company in the amount of
150,000 Euros ($220,935 USD). Repayment of the loan is due on closing of any
future financing arrangement by the Company. Accrued interest of $10,614 has
been recorded in accounts payable and accrued liabilities for the year ended
December 31, 2007.

On November 6, 2007, the Company received an unsecured, 6%
interest per annum loan from a shareholder of the Company in the amount of
75,000 Euros ($110,468 USD). Repayment of the loan is due on closing of any
future financing arrangement by the Company. Accrued interest of $987 has been
recorded in accounts payable and accrued liabilities for the year ended December
31, 2007.

On November 14, 2007, the Company received an unsecured, 6%
interest per annum loan from a shareholder of the Company in the amount of $250
CAD ($252 USD). Repayment of the loan is due on closing of any future financing
arrangement by the Company. Accrued interest of $2 has been recorded in accounts
payable and accrued liabilities for the year ended December 31, 2007.

At December 31, 2007, the Company had amounts due to related
parties in the amount of $198,517 (December 31, 2006 $47,551). This amount
includes $136,100 (December 31, 2006 $35,000) payable to three directors for
services rendered during the year. This amount is to be paid part in cash and
part in stock at a future date with the number of common shares determined by
the fair value of the shares on the settlement date. The amounts owing bear no
interest and are unsecured.

For the year ended December 31, 2007, $26,707 (December 31,
2006 $NIL) was incurred in general and administrative expenses by the Company
for services rendered by the current Chief Financial Officer and Corporate
Secretary of the Company. At December 31, 2007, $20,176 (December 31, 2006
$17,200) was owed to the former Chief Financial Officer and Corporate Secretary
and $28,246 (December 31, 2006 $24,080) was owed to the former President / Chief
Executive Officer. The Corporate Secretary of Arvana Networks Inc. was owed
$13,995 at December 31, 2007 (December 31, 2006 $6,364). The amounts owing bear
no interest and are unsecured.

- 30 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

For the year ended December 31, 2006, $298,560 was incurred by
the Company for services rendered by directors, the past President, the
Corporate Secretary of Arvana Inc. and the Corporate Secretary of Arvana
Networks. As at December 31, 2006, $47,551 was owed to these individuals.

During the year ended December 31, 2006 the Company issued
451,875 common shares to Directors of the Company as settlement for outstanding
debt. The shares were valued at the market price of the Companys stock on the
date of settlement.

8. Share Capital

(a) During the quarter ended December 31, 2007, 3,541,700
shares were to be returned to the Company and cancelled as part of the Brulex
Settlement Agreement entered into on December 7, 2007, see Note 5. These shares
had not yet been received at December 31, 2007 and have been recorded as
treasury stock at a value of $283,336 until they are received and cancelled.

During the quarter ended September 30, 2007, the Company
cancelled and returned to treasury 16,000 common shares at a par value of $0.001
per share. These shares had been held as unissued by the Companys legal
counsel.

During the quarter ended September 30, 2007, the Company issued
500,000 common shares at a price of $0.15 per share in settlement of debt, see
Note 3.

During the quarter ended December 31, 2006, the Company issued
shares for the settlement of debt owed to three directors for services rendered
during fiscal 2006. The Company issued 451,875 shares in settlement of $180,750
in debt.

On October 31, 2006, the Company completed a private placement
with three investors of 2,625,000 shares of the Companys common stock at a
price of US$0.40 per share for gross proceeds of US$1,050,000. A commission of
US$73,500 was paid in connection with the private placement transaction. Net
proceeds were $976,500.

During the quarter ended September 30, 2006, the Company issued
3,541,700 shares for part of the consideration for the purchase of BCH Beheer
and its wholly-owned subsidiary Hallotel Deutschland GmbH. The Company also
issued 208,300 shares as a finders fee for the same transaction, see Note
5.

(b) The Company accounts for all stock-based payments to
employees and non-employees under SFAS No.123R, Accounting for Stock-Based
Compensation, using the fair value based method. Under the fair value method,
stock-based payments are measured at the fair value of the consideration
received, or the fair value of the equity instruments issued, or liabilities
incurred, whichever is more reliably measurable. The cost of stock-based
payments to non-employees that are fully vested and non-forfeitable at the grant
date is measured and recognized at that date.

(c) The Company has a stock option plan in place under which it
is authorized to grant options to executive officers and directors, employees
and consultants enabling them to acquire up to 10% of the issued and outstanding
common stock of the Company. Under the plan, the exercise price of each option
equals the market price of the Company's stock as calculated on the date of
grant. The options can be granted for a maximum term of 10 years. On June 5,
2006, the Company granted 1,600,000 stock options to its directors and
employees. Each option is exercisable into one common share until December 31,
2009 at an exercise price of $1.25. The options were valued at $1,424,000 using
the Black-Scholes model, and will be expensed over the vesting period of the
options. The Company recorded an expense of $662,800 in 2007 ($232,400 in 2006)
for the pro-rated portion of the full charge. The weighted average fair value of
options granted during 2006 was $0.89.

- 31 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

As at December 31, 2007, the following incentive stock options
are outstanding:

|           |          |                  
|---------- | -------- | -----------------
|Number     | Exercise |                  
|of options | Price    | Expiry Date      
|           |          |                  
|1,600,000  | $ 1.25   | December 31, 2009

Stock option transactions and the number of share options
outstanding are summarized as follows:

|                                        |  |                  |  |   |          | 
|--------------------------------------- |  | ---------------- |  | - | -------- | 
|                                        |  |                  |  |   | Weighted | 
|                                        |  |                  |  |   | Average  | 
|                                        |  | Number           |  |   | Exercise | 
|                                        |  | of
      Options |  |   | Price    | 
|                                        |  |                  |  |   |          | 
|Balance, December 31, 2005              |  | -                |  | $ | -        | 
|Options granted                         |  | 1,600,000        |  |   | 1.25     | 
|Options expired                         |  | -                |  |   | -        | 
|Options exercised                       |  | -                |  |   | -        | 
|Balance, December 31, 2006              |  | 1,600,000        |  |   | 1.25     | 
|Options granted                         |  | -                |  |   | -        | 
|Options expired                         |  | -                |  |   | -        | 
|Options exercised                       |  | -                |  |   | -        | 
|Balance, December 31, 2007              |  | 1,600,000        |  | $ | 1.25     | 
|                                        |  |                  |  |   |          | 
|Number of options currently exercisable |  | 1,066,667        |  | $ | 1.25     | 

The following assumptions were used for
the Black-Scholes valuation of stock options granted:

| | Risk-free interest rate  | 5.00%    
| | ------------------------ | ---------
| | Expected life of options | 3.6 years
| | Annualized volatility    | 100%     
| | Dividend rate            | 0.00%    

9. Segmented Information

The Company had one reportable segment, which was the
development of VoIP telephone services. That reportable segment was determined
based on the nature of the products offered. All the total property and
equipment of $702 at December 31, 2007 is located in North America, at December
31, 2006, $81,262 was located in North America, $30,837 was located in Brazil
and $618,587 was located in Germany. All of the Companys revenue was generated
in Germany from its disposed-of subsidiary Hallotel prior to disposal.

- 32 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

10. Deferred Income Taxes

Income tax benefits attributable to losses from United States
of America operations was $Nil for the years ended December 31, 2007 and 2006,
and differed from the amounts computed by applying the United States of America
federal income tax rate of 34 percent to pretax losses from operations as a
result of the following:

|                                                       |   |            |   |   |            |  
|------------------------------------------------------ | - | ---------- | - | - | ---------- | -
|                                                       |   | 2007       |   |   | 2006       |  
|                                                       |   |            |   |   |            |  
|Loss for the year before income taxes                  | $ | (3,320,855 | ) | $ | (1,730,430 | )
|                                                       |   |            |   |   |            |  
|Computed "expected" tax benefit                        | $ | (1,129,091 | ) | $ | (588,346   | )
|Non deductible expenses                                |   | 1,112,081  |   |   | 180,253    |  
|Lower effective income tax rate on (income)
      loss |   | (14,354    | ) |   | 34,841     |  
|of foreign subsidiaries                                |   |            |   |   |            |  
|Change in valuation allowance                          |   | 85,899     |   |   | 385,752    |  
|                                                       |   |            |   |   |            |  
|Income tax expense                                     | $ | 54,535     |   | $ | 12,500     |  

The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax liabilities at
December 31, 2007 and 2006 are presented below:

|                                                   |   |          |   |   |          |  
|-------------------------------------------------- | - | -------- | - | - | -------- | -
|                                                   |   | 2007     |   |   | 2006     |  
|Deferred tax assets:                               |   |          |   |   |          |  
|Net operating loss carry
      forwards - US       | $ | 295,099  |   | $ | 223,863  |  
|Net operating
      loss carry forwards - Brazil   |   | 391,418  |   |   | 324,493  |  
|Net operating loss carry
      forwards  Barbados |   | 51,014   |   |   | 51,014   |  
|                                                   |   | 737,531  |   |   | 599,370  |  
|Valuation allowance                                |   | (737,531 | ) |   | (599,370 | )
|Net deferred tax assets                            |   | -        |   |   | -        |  
|Deferred tax liabilities:                          |   |          |   |   |          |  
|Property and
      equipment  Germany             |   | -        |   |   | (59,159  | )
|Net deferred tax
      liabilities                 | $ | -        |   | $ | (59,159  | )

The valuation allowance for deferred tax assets as of December
31, 2007 and 2006 was $737,531 and $599,370, respectively. In assessing the
realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be
realized. The ultimate realization of deferred tax assets is dependent upon the
generation of future taxable income during the periods in which those temporary
differences become deductible.

- 33 -

---

|ARVANA INC. AND SUBSIDIARIES                  
|----------------------------------------------
|(A development stage company)                 
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|For the Years Ended December 31, 2007 and 2006
|(expressed in US dollars)                     
|                                              

Management considers the scheduled reversal of deferred tax
liabilities, projected future taxable income, and tax planning strategies in
assessing the realizability of deferred tax assets. In order to fully realize
the deferred tax asset attributable to net operating loss carryforwards, the
Company will need to generate future taxable income of approximately $2,220,000
prior to the expiration of the net operating loss carryforwards. Of the
$2,223,224 operating loss carryforwards, $867,939 is attributable to the US, and
expires between 2026 to 2028; $1,151,229 is attributable to Brazil and can be
carried forward indefinitely. The remaining $204,056 is attributable to Barbados
and will expire in 2016.

11. Subsequent Events

Subsequent to December 31, 2007 the Company has received loans
from four individuals totaling $200,000. The loans are unsecured, payable on
demand and bear interest at the rate of 6% per annum.

- 34 -

---

|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH
      ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
|------- | -------------------------------------------------------------------------------------------

Engagement of Davidson and Company

We engaged Davidson and Company, Chartered Accountants, as its
principal independent registered public accounting firm effective May 9, 2007.
Concurrent with this appointment, Dohan and Company, Certified Public
Accountants ("Dohan and Company") have resigned as principal independent
registered public accounting firm of the Company effective May 9, 2007. The
decision to change the Companys principal independent registered public
accounting firm has been approved by the Companys board of directors.

During the period of Dohan and Companys engagement as our
principal independent registered public accounting firm from January 25, 2006 to
May 9, 2007, there were no disagreements between the Company and Dohan and
Company on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedures, which disagreements if not resolved
to the satisfaction of Dohan and Company would have caused them to make
reference thereto in their report on the Companys audited consolidated
financial statements.

We provided Dohan and Company with a copy of the foregoing
disclosures and requested in writing that Dohan and Company furnish it with a
letter addressed to the Securities and Exchange Commission stating whether or
not they agree with such disclosures. The Company received the requested letter
from Dohan and Company wherein they have confirmed their agreement to the
Companys disclosures. A copy of Dohan and Companys letter has been filed as an
exhibit to our Current Report on Form 8-K dated May 8, 2007.

|ITEM 8A. | CONTROLS AND PROCEDURES.
|-------- | ------------------------

Disclosure Controls and Procedures

We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of December 31, 2007 (the Evaluation Date). This evaluation
was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed below.

Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.

Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in this report, we believe that our financial statements contained in
our Annual Report on Form 10-KSB for the year ended December 31, 2007 fairly
present our financial condition, results of operations and cash flows in all
material respects.

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Management's Annual Report on Internal Control over
Financial Reporting

Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act, for the Company.

Internal control over financial reporting includes those
policies and procedures that: (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and
dispositions of our assets; (2) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations of its
management and directors; and (3) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on the financial statements.

Management recognizes that there are inherent limitations in
the effectiveness of any system of internal control, and accordingly, even
effective internal control can provide only reasonable assurance with respect to
financial statement preparation and may not prevent or detect material
misstatements. In addition, effective internal control at a point in time may
become ineffective in future periods because of changes in conditions or due to
deterioration in the degree of compliance with our established policies and
procedures.

A material weakness is a significant deficiency, or combination
of significant deficiencies, that results in there being a more than remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected.

Under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer, management conducted an
evaluation of the effectiveness of our internal control over financial
reporting, as of the Evaluation Date, based on the framework set forth in
Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO). Based on its evaluation under
this framework, management concluded that our internal control over financial
reporting was not effective as of the Evaluation Date.

Management assessed the effectiveness of the Companys internal
control over financial reporting as of Evaluation Date and identified the
following material weaknesses:

Inadequate Segregation of Duties: We have an inadequate
number of personnel to properly implement control procedures.

Insufficient Number of Directors to form a Functioning Audit
Committee:We only have two directors on our Board of Directors and while
they are both outside directors this is not considered sufficient to have a
functioning audit committee, resulting in ineffective oversight in the
establishment and monitoring of required internal controls and procedures.

Management is committed to improving its internal controls and
will (1) continue to use third party specialists to address shortfalls in
staffing and to assist the Company with accounting and finance responsibilities,
(2) increase the frequency of independent reconciliations of significant
accounts which will mitigate the lack of segregation of duties until there are
sufficient personnel and (3) consider appointing outside directors and audit
committee members in the future.

Management, including our Chief Executive Officer and Chief Financial
  Officer, has discussed the material weakness noted above with our independent
  registered public accounting firm. Due to the nature of this material weakness,
  there is a more than remote likelihood that misstatements which could be material
  to the annual or interim financial statements could occur that would not be
  prevented or detected.

- 36 -

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This Annual Report does not include an attestation report of
  our registered public accounting firm regarding internal control over financial
  reporting. Management's report was not subject to attestation by the our registered
  public accounting firm pursuant to temporary rules of the SEC that permit us
  to provide only management's report in this annual report.

Changes in internal control over financial reporting

As of the Evaluation Date, there were no changes in our
internal control over financial reporting that occurred during the fiscal year
ended December 31, 2007 that have materially affected, or that are reasonably
likely to materially affect, our internal control over financial reporting.

Limitations on the effectiveness of controls and
procedures

Our management, including our Chief Executive Officer and Chief
Financial Officer, do not expect that the our controls and procedures will
prevent all potential errors or fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met.

|ITEM 8B. | OTHER INFORMATION.
|-------- | ------------------

Not applicable.

|ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND
      CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
      ACT.
|------- | ----------------------------------------------------------------------------------------------------------------------------

Our current executive officers and directors are:

|Name                | Age | Position                                                 
|------------------- | --- | ---------------------------------------------------------
|Sir John Baring (1) | 60  | Chairman of the Board of
      Directors                 
|Ross Wilmot (1)     | 64  | Director                                                 
|Wayne Smith         | 51  | Chief Executive Officer and
      Chief Financial Officer

|(1) | Member of our Audit Committee and our
      Compensation Committee
|--- | ------------------------------------------------------------------

Set forth below is a brief description of the background and
business experience of each of our executive officers and directors for the past
five years:

Sir John Baring was appointed Chief Executive Officer
and director to the board of directors (the Board) on May 26, 2005. Following
the appointment of Mr. Jervis as Chief Executive Officer on October 17, 2005,
Sir John was appointed Chairman of the board. Sir John brings more than 30 years
of banking and investing experience to management. Since June 2002, Sir John has
acted as a managing and founding member of Mercator Management LLC, a leading
fund management company.

- 37 -

---

Ross Wilmot was appointed director on August 19, 2005.
Mr. Wilmot is a Chartered Accountant and for the past ten years has provided
independent financial consulting services. In addition to serving on the board
of Arvana, Mr. Wilmot serves the following public companies, CTF Technologies
Inc., Orex Ventures Inc., Orko Gold Corporation, Avigo Resources Corp., and Verb
Exchange Inc. He is a director in all of the companies and Chief Financial
Officer in all but Verb Exchange. Mr. Wilmot is the Chairman of the audit
committee.

Wayne Smithhas been the Chief Financial Officer since
  May 8, 2007, and the Chief Executive Officer since December 7, 2007. Prior to
  working for the Company, Mr. Smith worked for Visiphor Corporation as Chief
  Operating Officer and Chief Financial Officer from July 2003 through January
  2007. Prior to that time, he served as Visiphors Chief Financial Officer
  from September 2002 to July 2003, and began with Visiphor in May 2002. Since
  1997, Mr. Smith has also been a partner of TelePartners Consulting Inc., a consulting
  services company that provides management and financial consulting services.
  From May 2002 to September 2002, Mr. Smith served as comptroller of International
  Portfolio Management. From October 2001 to May 2002, Mr. Smith was a risk management
  advisor of Peter Reimer & Associates. From 1997 to July 2001 Mr. Smith was
  an Audit Senior of Amisano Hanson Chartered Accountants. Mr. Smith holds a Chartered
  Accountants designation in Canada.

Each of our directors was appointed as a director at our annual
meeting of shareholders on July 24, 2006. Each member of our board of directors
is elected annually and holds office until the next annual meeting of
shareholders or until his or her successor has been elected or appointed, unless
his or her office is earlier vacated in accordance with our bylaws. Our officers
serve at the discretion of our board of directors and are appointed
annually.

Audit Committee and Audit Committee Financial Expert

Our board of directors has established an audit committee that
is comprised of Sir John Baring, Chairman, and Ross Wilmot.

Our board of directors has determined that Mr. Wilmot qualifies
as an audit committee financial expert, as defined by the rules of the SEC.
Our board of directors has further determined that Mr. Wilmot and Sir John are
independent as that term is defined in Rule 121 of the American Stock Exchange
(AMEX) listing standards.

The audit committee recommends independent accountants to audit
its financial statements, discusses the scope and results of the audit with the
independent accountants, considers the adequacy of the internal accounting
controls, considers the audit procedures of the Company and reviews the
non-audit services to be performed by the independent accountants.

The audit committee currently consists of only two members as
the board of directors does not currently have more than two independent
directors. We are actively seeking an additional independent director to be
appointed to the board of directors and the audit committee.

Code of Ethics

We have adopted a Code of Ethics that applies to all the
Companys directors, officers and employees. A copy of our Code of Ethics was
incorporated by reference in our previously filed Form 10-KSB for fiscal 2006 as
an exhibit.

- 38 -

---

Significant Employees

We do not have any other significant employees, other than our
directors and executive officers named above.

Compliance with Section 16(a) of the Securities Exchange
Act

Section 16(a) of the Exchange Act requires our executive
officers and directors, and persons who beneficially own more than ten percent
of our equity securities, to file reports of ownership and changes in ownership
with the Securities and Exchange Commission. Officers, directors and greater
than ten percent shareholders are required by SEC regulation to furnish us with
copies of all Section 16(a) forms they file. Based on our review of the copies
of such forms received by us, we believe that during the fiscal year ended
December 31, 2007 all such filing requirements applicable to our officers and
directors were complied with, except as set forth below:

Name and Principal Position
    Number of Late Reports
    Transactions Not Timely
      Reported
    Known Failures to File a
      FormWayne Smith, CFO
    Nil
    Nil
    NilTeyfik Oezcan, former Director and former CEO
    Nil
    Nil
    NilRoss Wilmot,
      Director
    Nil
    Nil
    NilKaren Engleson, former Corporate Secretary and
      former CFO
    Nil
    Nil
    NilBrulex ( formerly greater than 10% Shareholder)
    Nil
    Nil
    One


|ITEM 10. | EXECUTIVE COMPENSATION.
|-------- | -----------------------

Summary Compensation Table

The following table sets forth certain compensation information
for:

- Teyfik Oezcan, our former chief executive officer,
- Wayne Smith, our chief financial officer,
- Karen Engleson, our former chief financial officer and former corporate
  secretary,

One former executive officer of the Company earned total annual
salary and bonus exceeding $100,000 during the fiscal year ended December 31,
2007.

- 39 -

---

Name and Principal
      Position
    Year
    Salary
      ($)
    Bonus
      ($)
    Stock Awar
      ds ($)
    Option
      Awards ($)
    Non- Equity Incentive PlanCompe n-sation($)
    Non- qualified
      **Deferred** **Compen-**
      sation **Earnings** ($)
    All Other
      Compen- sation ($)
    Total
      ($)Teyfik Oezcan, former President and former
      Chief Executive Officer(1)
    2007 2006 2005
    $229,544(1)$6,500 Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    $229,544 $6,500 NilWayne Smith, Chief Financial
      Officer(2)
    2007 2006 2005
    $26,707 Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    $26,707 Nil NilKaren Engleson, Former Chief Financial
      Officer and former Corporate Secretary(3)
    2007 2006 2005
    $12,919 Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil $89,000 Nil
    Nil Nil Nil
    Nil Nil Nil
    Nil Nil Nil
    $12,919 $89,000 Nil


|(1) | Mr. Oezcan was appointed president and chief executive
      officer on December 20, 2006 and held this position until December 7,
      2007. His contract calls for an annual salary of 180,000 euro. The pro-
      rated amount he was paid for the period until December 7, 2007 was 168,164
      euro ($229,544 USD).
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                             
|(2) | Mr. Smith was appointed as our chief financial officer on
      May 8, 2007.                                                                                                                                                                                                                                                
|    |                                                                                                                                                                                                                                                                                                                             
|(3) | Ms. Engleson was appointed as our corporate secretary in
      October 2005. She was also appointed as acting chief financial officer on
      March 14, 2007 and held this position until May 8,
2007.                                                                                                                     

- 40 -

---

Outstanding Equity Awards as of December 31, 2007

The following table summarizes the outstanding equity awards as
of December 31, 2007 for each of our named executive officers:

Option Awards
    Stock AwardsName
    Number
      of Securities Underlying Unexercised
      Options (#) Exercisable
    Number
      of Securities Underlying Unexercised
      Options (#) Unexercisable
    Equity
      Incentive Plan Awards: Number of
      Securities Underlying Unexercised
      Unearned Options (#)
    Option
      Exercise Price ($)
    Option
      Expiration Date
    Number
      of Shares or Units of Stock
      That Have Not Vested
      (#)
    Market Value
      of Shares or Units
      of Stock That Have
      Not Vested ($)
    Equity Incentive
      Plan Awards: Number of
      UnearnedShares, Units or
      Other Rights That HaveNot
      Vested (#)
    Equity Incentive
      Plan Awards: Market or Payout
      Value of **Unearned** Shares,
      Units or Other Rights **That
      Have** Not Vested ($)Teyfik Oezcan
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/AWayne Smith
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/A
    N/AKaren Engleson
    33,333(1)
    66,667(1)
    N/A
    $1.25
    December 31, 2009
    N/A
    N/A
    N/A
    N/A


(1) Unvested options vest as to one-third on each of January 1,
2007, January 1, 2008 and January 1, 2009.

No share purchase options were granted to or exercised by our
named executive officers during our fiscal year ended December 31, 2007.

Long-Term Incentive Plans

We do not have any long-term incentive plans, pension plans, or
similar compensatory plans for our directors or executive officers.

Change of Control Agreements

We are not party to any change of control agreements with any
of our directors or executive officers.

- 41 -

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Compensation of Directors

The following table summarizes the compensation of our
companys directors for the year ended December 31, 2007:

Name(1)
    Fees Earned or
      Paid in Cash ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non- Equity
      Incentiv e Plan Compen -sation
      ($)
    Non- qualified
      Deferred Compen- sation
      Earnings ($)
    All Other
      Compen- sation ($)
    Total
      ($)Sir John Baring
    $60,000
    $0
    $0
    $0
    $0
    $0
    $60,000Ross Wilmot
    $63,600
    $0
    $0
    $0
    $0
    $0
    $63,600Leonard Gordon
    $12,500
    $0
    $0
    $0
    $0
    $0
    $12,500


|1) | Teyfik Oezcan, Wayne Smith and Karen Engleson are not
      included in this table as they are reported as officers or former officers
      of the Company and did not receive additional compensation for their
      service as directors. The Companys standard compensation arrangement for
      directors consists of $5,000 per month payable 50% in cash and 50% in
      shares. The Company has deferred all cash and share payments to directors
      until receipt of additional financing.
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Outstanding Equity Awards as of December 31, 2007

The following table summarizes the outstanding equity awards as
of December 31, 2007 for each of our directors:

Option Awards
    Stock AwardsName
    Number
      of Securities Underlying Unexercised
      Options (#) Exercisable
    Number
      of Securities Underlying Unexercised
      Options (#) Unexercisable
    Equity
      Incentive Plan Awards: Number of
      Securities Underlying Unexercised
      Unearned Options (#)
    Option
      Exercise Price ($)
    Option
      Expiration Date
    Number
      of Shares or Units of Stock
      That Have Not Vested
      (#)
    Market Value
      of Shares or Units
      of Stock That Have
      Not Vested ($)
    Equity Incentive
      Plan Awards: Number of
      UnearnedShares, Units or
      Other Rights That HaveNot
      Vested (#)
    Equity Incentive
      Plan Awards: Market or Payout
      Value of **Unearned** Shares,
      Units or Other Rights **That
      Have** Not Vested ($)Sir John Baring
    50,000
    100,000(1)
    N/A
    $1.25
    December 31, 2009
    N/A
    N/A
    N/A
    N/A


- 42 -

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Option Awards
    Stock AwardsName
    Number
      of Securities Underlying Unexercised
      Options (#) Exercisable
    Number
      of Securities Underlying Unexercised
      Options (#) Unexercisable
    Equity
      Incentive Plan Awards: Number of
      Securities Underlying Unexercised
      Unearned Options (#)
    Option
      Exercise Price ($)
    Option
      Expiration Date
    Number
      of Shares or Units of Stock
      That Have Not Vested
      (#)
    Market Value
      of Shares or Units
      of Stock That Have
      Not Vested ($)
    Equity Incentive
      Plan Awards: Number of
      UnearnedShares, Units or
      Other Rights That HaveNot
      Vested (#)
    Equity Incentive
      Plan Awards: Market or Payout
      Value of **Unearned** Shares,
      Units or Other Rights **That
      Have** Not Vested ($)Ross Wilmot
    50,000
    100,000(1)
    N/A
    $1.25
    December 31, 2009
    N/A
    N/A
    N/A
    N/A


|1) | Teyfik Oezcan, Wayne Smith and Karen Engleson are not
      included in this table as they are reported as officers or former officers
      of the Company and did not receive additional compensation for their
      service as directors.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                              
|2) | Unvested options vest as to one-third on each of January
      1, 2007, January 1, 2008 and January 1, 2009.                                                                                                                                 

No share purchase options were granted to or exercised by our
directors during our fiscal year ended December 31, 2007.

- 43 -

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|ITEM 11. | SECURITY OWNERSHIP OF
      CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT.
|-------- | ---------------------------------------------------------------------------

Security Ownership

The following table sets forth certain information concerning
the number of shares of our common stock owned beneficially as at April 14, 2008
by: (i) each of our directors, (ii) each of our executive officers, (iii) our
executive officers and directors as a group, and (iv) each beneficial
shareholder known to us to own more than 5% of our outstanding common stock.
Unless otherwise indicated, the shareholders listed possess sole voting and
investment power with respect to the shares shown.

Title of Class
    Name and Address of Beneficial
      Owner
    Number of Common Shares
    Percentage of Common
      Shares(1)Directors and OfficersCommon Stock
    Wayne Smith, CEO and CFO 11C-1015 Ironwork
      Passage Vancouver, BC V6H 3R4
    Nil
    NilCommon Stock
    Sir John Baring, director (2)
      328 Arcadia Drive Ancramdale, New York 12503
    392,500
    2.1%Common Stock
    Ross Wilmot, director(3)
      13548 19thAvenue South Surrey B.C. V4A 6B4
    263,125
    1.4%Common Stock
    All Directors and Executive
      Officers as a Group (3 persons)
    655,625
    3.5%5%
      ShareholdersCommon Stock
    N/A
    N/A
    N/A


|(1) | Under Rule 13d-3, a beneficial owner of a security
      includes any person who, directly or indirectly, through any contract,
      arrangement, understanding, relationship, or otherwise has or shares: (i)
      voting power, which includes the power to vote, or to direct the voting of
      shares; and (ii) investment power, which includes the power to dispose or
      direct the disposition of shares. Certain shares may be deemed to be
      beneficially owned by more than one person (if, for example, persons share
      the power to vote or the power to dispose of the shares). In addition,
      shares are
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- 44 -

---

|    | deemed to be beneficially owned by a person if the person
      has the right to acquire the shares (for example, upon exercise of an
      option) within 60 days of the date as of which the information is
      provided. In computing the percentage ownership of any person, the amount
      of shares outstanding is deemed to include the amount of shares
      beneficially owned by such person (and only such person) by reason of
      these acquisition rights. As a result, the percentage of outstanding
      shares of any person as shown in this table does not necessarily reflect
      the persons actual ownership or voting power with respect to the number
      of shares of common stock actually outstanding on April 15, 2008. The
      percentage calculations are based on the aggregate of 17,660,675 shares
      issued and outstanding as at April 15, 2008 plus 1,066,667 options that
      are eligible to be exercised on January 1, 2008 for a total of 18,727,342
      shares.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | Includes 292,500 common shares held in the name of Sir
      John Baring, and 100,000 shares issuable pursuant to the Companys stock
      option plan exercisable within 60 days of April 15, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | Includes 163,125 common shares held in the name of Ross
      Wilmot, and 100,000 shares issuable pursuant to the Companys stock option
      plan exercisable within 60 days of April 15, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

Change of Control

We are not aware of any arrangement that might result in a
change in control in the future.

Equity Compensation Plan Information as at December 31, 2007

Plan Category
    Number of securities to be
      issued upon exercise of outstanding options.
    Exercise price
    Number of securities remaining
      available for future issuance under equity
      compensation plansEquity compensation plan approved by security
      holders
    1,600,000
    $1.25
    1,400,000Equity compensation plans not approved by security
      holders
    N/A
    N/A
    N/A1,600,000
    $1.25
    1,400,000


- 45 -

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|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED
      TRANSACTIONS.
|-------- | -----------------------------------------------------

Except as described below, none of the following persons has
any direct or indirect material interest in any transaction to which we were or
are a party during the past two years, or in any proposed transaction to which
we propose to be a party:

|(A) | any director or officer;                                                                                                                                                                              
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                       
|(B) | any proposed nominee for election as a
director;                                                                                                                                                      
|    |                                                                                                                                                                                                       
|(C) | any person who beneficially owns, directly or indirectly,
      shares carrying more than 5% of the voting rights attached to our common
      stock; or                                              
|    |                                                                                                                                                                                                       
|(D) | any relative or spouse of any of the foregoing persons,
      or any relative of such spouse, who has the same house as such person or
      who is a director or officer of any parent or
subsidiary.

Amounts Due to Related Parties

At December 31, 2007, amounts due to related parties included
$63,600 owed by us to Ross Wilmot and $60,000 owed by us to Sir John Baring,
both directors of the Company. These amounts are unsecured, non-interest bearing
and payable on demand.

Brulex  Consultadoria Economica E Marketing Ltda.

On August 9, 2006 the Company, Brulex  Consultadoria Economica
E Marketing Ltda. (Brulex) and Hallotel Deutschland GmbH (Hallotel) entered
into a share purchase agreement (the Share Purchase Agreement) pursuant to
which the Company acquired control over Hallotel through the acquisition (the
Acquisition) of all of the outstanding shares of BCH Beheer B.V., a
wholly-owned subsidiary of the Vendor that owned all of the outstanding shares
of Hallotel. The purchase price for the Acquisition was paid by way of:

| | iv. | the issue of 3,541,700 shares of common stock of the
      Company, valued at $0.40 per share;                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | v.  | the payment of €500,000 ($639,700) in cash; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | vi. | the issuance of a promissory note in the principal amount
      of €250,000 provided that the promissory note will not be payable and will
      be deemed cancelled if certain information as set out in the Share
      Purchase Agreement to be delivered by Brulex to the Purchaser within 30
      days of the closing of the Acquisition relating to certain assets was not
      delivered or, if delivered, did not materially conform with information
      provided to the Company as at the date of the Share Purchase
    Agreement.

- 46 -

---

Pursuant to the Share Purchase Agreement, the purchase price
was increased by:

| | i.   | a payable to Brulex in the amount of €80,932 for the
      price actually paid by Hallotel for any telephone technology hardware or
      software assets acquired after October 19, 2005 and before the closing
      date of the Acquisition that are required for the provision of established
      Hallotel services to its customers; and
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | iii. | a payable to Brulex in the amount of €277,630 for
      commissions paid by Hallotel to its salespersons in respect of carrier
      pre-select sign-ups on net new customers after October 19, 2005 and before
      the closing date of the Acquisition, as provided in the Share Purchase
      Agreement.                                  

Prior to the acquisition date, Arvana had paid $26,941 for
acquisition related expenses and this amount was included in the purchase price.
A transaction fee was paid by issuing 208,300 additional shares of common stock
of the Company, valued at $0.40 per share.

The purchase price of the transaction, with a deemed value of
$2,948,003 was allocated as to $105,659 in cash, $1,080,529 in accounts
receivables, $15,371 in other current assets, $1,368,845 in accounts payable and
accrued liabilities and, $2,605,499 to the value of monthly subscribers held by
Hallotel at the time of the acquisition. Equipment valued at $500,915 and
software valued at $8,875 was held by Hallotel on the acquisition date.

On December 7, 2007, the Company entered into a settlement and
share purchase agreement with Brulex to dispose of the Companys subsidiary,
Hallotel. Under the terms of the agreement Brulex returned to the Company for
cancellation the 3,541,700 of its common shares issued for the acquisition of
BCH Beheer and Hallotel. The shares were valued at $283,336 based on the
Companys common share price of $0.08 on December 7, 2007. The amounts due to
Brulex under the terms of the original Acquisition were reduced by $447,116 to
€225,000. The Company wrote off a receivable due from Hallotel in the amount of
$74,913 as well as software retained by Hallotel in the amount of $64,104. The
original investment in Hallotel by the Company of $2,948,003 was adjusted by the
effect of Hallotels operations from acquisition to disposal resulting in a net
decrease in the Companys retained earnings of $74,455 and an accumulated other
comprehensive loss of $43,099. The net effect of the above transactions resulted
in a loss of $2,239,014 upon disposal of Hallotel.

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|ITEM 13. | EXHIBITS
|-------- | --------

The following exhibits are included with this Annual Report on
Form 10-KSB:

ExhibitNumber
      Description of Exhibit3.1
      Articles
          of Incorporation(1)3.2
      Bylaws,
          as amended(1)10.1
      Agreement and Plan of Reorganization
          between the Company, Arvana Networks, Inc. and the Shareholders of Arvana
          Networks, Inc. dated August 18, 2005(2)10.2
      Investment Agreement dated
          October 6, 2005 between the Company, Arvana Networks, Inc., Arvana Participações
          S.A., Gloinfo 500 Soluções EM Telemática Ltda. and Paulo
          Messina (3)10.3
      Amendment to Investment Agreement
          signed October 6, 2005 and dated October 4, 2005 between the Company,
          Arvana Networks, Inc., Arvana Participações S.A., Gloinfo
          500 Soluções EM Telemática Ltda. and Paulo Messina(3)10.2
      2006
          Stock Option Plan, dated June 5, 20065(5)10.5
      Share Purchase Agreement dated
          August 9, 2006 among Brulex-Consultadoria Economica E Marketing Ltda,
          Turinco Inc. and Hallotel Deutschland GmbH (6)10.6
      Termination Agreement between
          Arvana Inc., Gloinfo 500 Soluções EM Telemática Ltda.,
          Paulo Santos Messina and Lucia Sangiacomo Messina, Arvana Participações
          S.A., Arvana Comunicações do Brasil S. A. and Arvana Networks
          Inc. dated October 31, 2006. (7)10.7
      Regulation D Debt Conversion
          Agreement between Arvana Inc, Arvana Networks Inc, and IPH Horizon LLC,
          dated March 28, 2007(8)10.8
      Settlement and Share Purchase
          Agreement between Arvana Inc, Hallotel Deutschland GMBH, BCH Beheer
          B.V., and Teyfik Oezcan, dated December 7, 2007. (10)10.9
      Settlement and Share Repurchase
          Agreement between Arvana Inc and Brulex- Consultadoria Economica E Marketing
          Ltda, dated December 7, 2007. (10)14.1
      Code
          of Ethics (4)16.1
      Change
          in Registrants Certifying Accountant, dated May 8, 2007(9)31.1
      Certification
          of Chief Executive Officer and Chief Financial Officer pursuant to Rule
          13a-14(a) of the Exchange Act (11)


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32.1
      Certification of Chief Executive
          Officer and Chief Financial Officer pursuant to Rule 13a-14(b) of the
          Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section
          906 of the Sarbanes-Oxley Act of 2002 (11)


|(1)  | Previously filed with the SEC as an exhibit to the
      Companys registration statement on Form 10- SB filed with the SEC on May
      24, 2000.
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                   
|(2)  | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on August 19,
      2005.        
|     |                                                                                                                                                   
|(3)  | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on December 14,
      2005.      
|     |                                                                                                                                                   
|(4)  | Previously filed with the SEC as an exhibit to the
      Companys Annual Report on Form 10-KSB filed with the SEC on March 31,
      2006.       
|     |                                                                                                                                                   
|(5)  | Previously filed with the SEC as an exhibit to the
      Companys Quarterly Report on Form 8-K filed with the SEC on June 7,
      2006.         
|     |                                                                                                                                                   
|(6)  | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on August 15,
      2006.        
|     |                                                                                                                                                   
|(7)  | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on August 15,
      2006.        
|     |                                                                                                                                                   
|(8)  | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on May 4,
    2007.              
|     |                                                                                                                                                   
|(9)  | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on May 8,
    2007.              
|     |                                                                                                                                                   
|(10) | Previously filed with the SEC as an exhibit to the
      Companys Current Report on Form 8-K filed with the SEC on December 7,
      2007.       
|     |                                                                                                                                                   
|(11) | Filed as an exhibit to this Annual Report on Form
      10-KSB.                                                                                   

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|ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES
|-------- | --------------------------------------

The following table sets forth information regarding the amount
  billed to us by our independent auditor, Davidson & Company, LLP, for our
  last fiscal year and our prior independent auditor, Dohan and Company CPA's
  PA, for the previous fiscal year ended December 31, 2006:

Years ended December 312007
    2006Audit Fees:
    $25,000
    $38,400Audit Related
      Fees:
    $18,834
    $20,006Tax Fees:
    $Nil
    $NilAll Other Fees:
    $Nil
    $NilTotal:
    $38,834
    $58,406


Audit Fees

Audit Fees are the aggregate fees billed by our independent
auditor for the audit of our consolidated annual financial statements, reviews
of interim financial statements and attestation services that are provided in
connection with statutory and regulatory filings or engagements.

Audit-Related Fees

Audit-Related Fees are fees charged by our independent auditor
for assurance and related services that are reasonably related to the
performance of the audit or review of our financial statements and are not
reported under "Audit Fees." This category comprises fees billed for independent
accountant review of our interim financial statements and management discussion
and analysis, as well as advisory services associated with our financial
reporting.

Policy on Pre-Approval by Audit Committee of Services
Performed by Independent Auditors

Our Audit Committee pre-approves all audit services to be
provided to us by our independent auditors. Our Audit Committees policy
regarding the pre-approval of non-audit services to be provided to us by our
independent auditors is that all such services shall be pre-approved by the
Audit Committee. Non-audit services that are prohibited to be provided by our
independent auditors may not be pre-approved. In addition, prior to the granting
of any pre-approval, our Audit Committee must be satisfied that the performance
of the services in question will not compromise the independence of the
independent auditors.

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

ARVANA INC.

|By:   | */s/ Wayne Smith*                          | 
|----- | ------------------------------------------ | 
|      | Wayne Smith, Chief Executive
      Officer | 
|      |                                            | 
|Date: | April 14, 2008                             | 

In accordance with the Securities Exchange Act, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

|By:   | */s/ Wayne Smith*                                                    | 
|----- | -------------------------------------------------------------------- | 
|      | Wayne Smith, Chief Financial
      Officer                           | 
|      | (Principal Financial Officer and
      Principal Accounting Officer) | 
|      |                                                                      | 
|Date: | April 14, 2008                                                       | 
|      |                                                                      | 
|By:   | */s/ Sir John Baring*                                                | 
|      | Sir John Baring                                                      | 
|      | Director                                                             | 
|      |                                                                      | 
|Date: | April 14, 2008                                                       | 
|      |                                                                      | 
|By:   | */s/ Ross Wilmot*                                                    | 
|      | Ross Wilmot                                                          | 
|      | Director                                                             | 
|      |                                                                      | 
|Date: | April 14, 2008                                                       | 

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